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Can you combine accounting methods?

Yes, if the combination shows income and is used consistently, there is no reason why a taxpayer can’t combine different accounting methods. However, there are certain restrictions: 

  1. If inventory is necessary to account for income, the accrual method must be used for purchases and sales. 

  2. If the cash method is used for reporting income, this method must also be used for reporting expenses. 

  3. If the accrual method is used for reporting expenses, it must also be used for reporting income. 

  4. Any combination that includes the cash method is treated as the cash method. 


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