Which GAAP will guide John in deciding

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Question - Case - Michael is the owner of all of the shares of a private corporation called Embroidered Shirts Inc. Michael has had a very profitable year and is showing a profit of $350,000. He is aware that he can claim a small business deduction on income that is less than $300,000. So he wants to ensure that his net income is less than $300,000 to best take advantage of this reduction in tax. Michael has decided to delay sending invoices for a jobs completed in December until January. This will put the revenue for these jobs into the following fiscal year. By doing this, Michael can keep his net income under $300,000 and reduce his taxes.

John, the accountant for Embroidered Shirts Inc., is concerned about this scheme.

Which GAAP will guide John in deciding whether invoices can be delayed? Why?

Reference no: EM132741779

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