Final answer:
The false statement about the accrual method of accounting is that the method under GAAP and the accrual method for computing taxable income are identical. Accrual accounting under GAAP and for tax purposes differ due to unique standards and objectives governing financial reporting and tax compliance.
Step-by-step explanation:
The question is about the accrual method of accounting which is a concept in financial accounting. Among the given statements, the false one is: The accrual method of accounting under GAAP and the accrual method of accounting for computing taxable income are identical. It's essential to understand that while the accrual method under Generally Accepted Accounting Principles (GAAP) and the accrual method for tax purposes might be similar in that they both record income and expenses when they are earned or incurred rather than when they are received or paid, they are not identical due to different objectives and rules.
GAAP is geared towards providing information useful for investment and lending decisions, while tax accounting aims at computing taxable income in accordance with the tax laws. In practice, GAAP accrual accounting might require the use of allowances for doubtful accounts, revenue recognition criteria, and other accruals that differ from tax accounting methods that are influenced by the tax code and its specific provisions. It's also worth noting that GAAP is a set of standards and principles designed to increase the transparency and consistency of financial reporting across different entities, but separately, the Internal Revenue Service (IRS) has its own standards for what is recognized as revenue and expenses for tax purposes. Consequently, companies often keep two sets of books: one for financial reporting under GAAP and another for tax reporting purposes.