Assume the business has a 5-year, interest only, bank loan where the bank charges the interest of $620 monthly on the 15th of the month. Considering both tax regulations and accounting standards: Compare and contrast the two treatments of this transaction, explaining how accrual accounting treats this transaction at the end of June, and how tax accounting treats this transaction at the end of June. Use figures to demonstrate the differences. Explain how, and why, this difference occurs. Include, the basis of the way both accrual and tax accounting treat transactions?

Critically evaluate which of these methods provides a more accurate reflection of the true position of the business and justify your answer. Explain, in your opinion, whether you think there should be different methods for recording the same transaction. Given reasons for your opinion.