Question on M&I guide - Accrual vs Cash Accounting
I've been reviewing the M&A 400 investment banking questions guide, and came across the question:
"How is GAAP accounting different from tax accounting?" and the answer is:
"1. GAAP is accrual-based but tax is cash-based.
2. GAAP uses straight-line depreciation or a few other methods whereas tax
accounting is different (accelerated depreciation).
3. GAAP is more complex and more accurately tracks assets/liabilities whereas tax
accounting is only concerned with revenue/expenses in the current period and
what income tax you owe. "
On 1 and 2, I thought this wasn't always the case and was something that companies would choose? Can someone explain this answer to me?
SilverboyBaghs, pure crickets, that's where I come in. Any of these useful?
Fingers crossed that one of those helps you.
Sorry, bump
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