Accounting Periods and Methods.html

Accounting Durations and Methods ,Office 2007
Each taxpayer (business or individual) must figure taxable income on an annual accounting period called a tax year. The calendar year is the most common tax year. Other tax years are a fiscal year and a short tax year.

Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting strategies are the cash method and an accrual method. Under the cash method,Cheap office professional plus 2007, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method,Windows 7 Enterprise 64, you generally report income in the tax year you earn it,Windows 7 Starter Key, regardless of when payment is received,Windows 7 Home Premium, and deduct expenses in the tax year you incur them, regardless of when payment is made.

For a complete discussion refer to Publication 538, Accounting Periods and Approaches.

References/Related Topics

Small Business Tax Workshop, Lesson 1 - What you need to know about federal taxes and your new business Starting a Business Tax Years Tax Calendar for Small Businesses and Self-Employed 
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Page Last Reviewed or Updated: March 04,Accounting Home Accounting Sam M. Walton Colle, 2011