Frequently Asked Question
Inventory Accounting Services FAQS
1. What is Cash Method Inventory Accounting?
Maintaining exact inventory numbers is essential for proper business operations. Unfortunately, it is typically not cost effective for businesses to physically count their inventory each month for reporting purposes. One way to account for inventory is using the cash method of accounting, which provides a simple accounting method for businesses to use when calculating inventory.
2. What is Cash Method Accounting?
The cash method of accounting is a simple accounting system where income is reported when cash is received and expenses are reported when cash leaves the business. Most businesses use the accrual method of accounting, which is required by law. Small businesses with less than $1 million in gross annual sales may elect to use the cash method of accounting for their business.