Accounts

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will take another 30 days to add the finishing touches, technically it doesn't go on your books until the 30 days pass.

Say you purchase a new laser printer on credit in May and pay $1,000 for it in July, two months later. Using cash-method accounting you would record a $1,000 payment for the month of July, the month when the money is actually paid. But under the accrual method, the $1,000 payment would be recorded in May, when you take the laser printer and become obligated to pay for it. Similarly, if your computer installation business finishes a job on November 30, 2002, and doesn't get paid until


January 10, 2003, you'd record the payment in January 2003 if you use the cash method. Under the accrual method the income would be recorded in your books in November of 2002.

The most significant way your business is affected by the accounting method you choose involves the tax year in which income and particular expense items will be counted. For instance, if you incur expenses in the 2002 tax year but don't pay them until the 2003 ...