Assume that you own an accounting business, and that you account for this business on a cash basis. Also assume that you are trying to show a low income for the year for your tax return.

A. Which of these possible actions in December would help you report lower income on your tax return?

a. Asking clients who owe you money to wait until January before paying you.

b. Making sure you pay for all your bills in December, instead of waiting until January, when they become due.

c. Prepaying various expenses that will need to be paid in January and February.

B. Would those actions reduce your income if you were using the accrual basis? Explain.