Falcon Corporation had gross receipts of $5 million in 2005,$6 million in 2006,and $3 million in 2007.Hawk Corporation,a PSC,had gross receipts of $4 million in 2005,$6 million in 2006,and $7 million in 2007.Which of the corporations will be allowed to use the cash method of accounting in 2008?
A)Falcon Corporation only.
B)Hawk Corporation only.
C)Both Falcon Corporation and Hawk Corporation.
D)Neither Falcon Corporation nor Hawk Corporation.
E)None of the above.

Question

Quizplus · Accepted Answer

Hawk Corporation,a PSC,may use the cash method.Falcon Corporation can use the cash receipts method because it had average annual gross receipts of $5 million or less during the three preceding years.

Falcon Corporation Had Gross Receipts of $5 Million in 2005,$6