1. Which of the following entities may not use the cash method of accounting?

A.) A partnership with average annual gross receipts in excess of $5 million.

B.) A C corporation whose average annual gross receipts for the preceding 3 taxable years do not exceed $5 million.

C.) A C corporation that is substantially owned by its employees and whose business is selling goods with annual gross receipts in excess of $5 million for all tax years since its inception.

D.) An S corporation.

Explain your answer -