Chartered Retirement Planning Counselor (CRPC) Practice Exam 2026 - Free CRPC Practice Questions and Study Guide

Question: 1 / 655

When is the income from a cash basis taxpayer recognized?

When the invoice is sent

When the check is received

The recognition of income for a cash basis taxpayer occurs at the point when cash is actually received. This means that income is recorded when the payment is made, reflecting the actual inflow of cash to the taxpayer. In the cash basis accounting method, transactions are recognized based on the cash movement rather than the timing of when services are performed or invoices are issued. This approach simplifies income tracking by associating income directly with cash transactions, making it clear when a taxpayer truly benefits financially from their dealings.

For instance, even if an invoice is sent or a service is performed, the income isn't recognized until the payment is received, reinforcing the cash basis principle that focuses on actual cash flow rather than accrual events.

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When the service is performed

When the financial year ends

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