Answer:
Hybrid basis
Step-by-step explanation:
Companies use various accounting methods according to their unique requirements. Below is a description of different accounting systems:
- Cash basis records revenues and expenses when cash is received or paid.
- Accrual basis recognizes revenues and expenses when they are earned. For instance, if a service is provided to a client who will pay later, the earned revenue is acknowledged at the time of service.
- Modified basis blends cash and accrual principles, treating short-term assets like accounts receivable as cash items while long-term assets follow an accrual approach.
- Hybrid basis applies both cash and accrual methods for various expenses and taxation, mainly for internal use.
In this context, Hariette aims to examine the payments made last month. This necessitates using a cash basis to show actual amounts received and disbursed last month, excluding accounts receivable and payable.
For tax provisions, she will apply accrual basis accounting, reflecting estimated future expenses.
Thus, the hybrid basis would be the most appropriate choice.
