Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.?

Question

Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.?

Answer 1

Over the long haul it averages out.

Answer 2

False.

Under the cash basis of accounting, income is reported when received physically (i.e. check in hand).  Under the accrual basis of accounting, income is reported when earned, i.e. when you perform the service or provide the product.  This may be much earlier than you get paid.

Companies on the cash basis often try to "hold" deposits at year end and deposit them the next year to keep income lower and defer taxes.