Two major bookkeeping practices, cash and accrual foundation, are accustomed to calculate taxable earnings for U.S. national income taxes.
an accounting method where income is taped whenever money is obtained, and expenses are recorded when cash is paid out. Money foundation accounting cannot adjust aided by the terms of GAAP and is perhaps not considered a good management device given that it will leave a period gap between recording the explanation for an activity (purchase or buy) as well as its result (repayment or receipt of cash). Its, however, less complicated as compared to accrual basis bookkeeping and very suitable for tiny companies that transact business primarily in money. Also referred to as cash accounting.