Todd operates a business using the cash basis of accounting. at the end of last year, todd was granted permission to switch his sales on account to the accrual method. last year todd made $420,000 of sales on account and $64,000 was uncollected at the end of the year. what is the todd's §481 adjustment for this year? a. increase income by $420,000b. increase income by $16,000c. increase expenses by $64,000d. increase expenses by $420,000e. todd has no §481 adjustment this year.

B. increase income by $16,000

Explanation:

Tod uses the cash basis of accounting. This menas it will recognize revenues and expenses when the colelction or payment are performed rather than time at which occur.

But ! Todd was granted permission to switch his sales on account to the accrual method.

Thus, it will adjust for the diffence between each method considering the time the norm conceeds to do so.

Cash method sales revenue:

total sales 420,000 - 64,000 uncollected: 356,000 sales income

Accrual method revenue:

420,000 accounts sales = 420,000 sales revenue

difference for change of method: 64,000

The  §481  Adjustment can be done within 4 years (the year of change plus the next three tax years)

So: 64,000 / 4 = 16,000 adjsutment for the current year.

answer: b) the us is the leading importer but not the leading exporter.

extra info:

the u.s is the largest importer but it is not the largest exporter as china sits on the top of the table when it comes to leading exporters.

but u.s is not far from first,

they rank in 2nd globally as the worlds largest exporter.

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