Chapter 9
Choosing Accounting Methods
In This Chapter
Selecting the best cost of goods sold expense method for the business
Depreciating in the fast and slow lanes
Deciding when to bite the bad-debts bullet
You may think that two businesses that are identical in every financial respect and have identical transactions during the year would report identical financial statements. You’d be wrong. The two businesses would have identical financial statements only if they made identical accounting choices, and that’s very unlikely. Different businesses make different accounting decisions.
Accounting is more than just reading the facts or interpreting the financial outcomes of business transactions. Accounting also requires accountants to choose between alternative accounting methods. Similar to the conservative states and liberal states addressed in politics, accounting has:
Conservative accounting methods: These accounting methods delay the recording of revenue and accelerate the recording ...
