The choice between Cash versus Accrual accounting is a business decision.
Many
businesses without inventories use the cash method because it is fairly simple.
Farming businesses with gross receipts of $25 million or less, qualified
personal service corporations, and entities with average annual gross receipts
of $10 million or less, may use the cash method.
On the other hand, if
you have inventory, need to track Cost of Goods Sold, and your business earned over $1 million in gross receipts
in each of the past three years, you'll generally use the accrual method for
sales and related costs.
If you don't have a compelling reason to use the accrual method, you are better served sticking with cash-basis accounting for simplicity, if for no other reason.
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