SEE-2 - Business Tax Preparation - Section 2.1

Determine business gross income, cost of goods sold, and the proper treatment of cash versus accrual accounting methods and constructive receipt.

Determine business gross income from gross receipts less cost of goods sold (COGS), applying the appropriate inventory valuation method and the uniform capitalisation rules where they apply. Distinguish the cash method - income when constructively received, deductions when paid - from the accrual method that uses the all-events test, and recognise when a taxpayer must use accrual because inventory is a material income-producing factor.

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