Final answer:
Sheridan and Associates maintains its records on the cash basis, where transactions are recorded when cash is received or paid.
Step-by-step explanation:
Sheridan and Associates maintains its records on the cash basis. Cash basis accounting is a method of recording transactions where revenue and expenses are only recognized when cash is received or paid out. This means that transactions are not recorded until the actual cash is received or paid.
For example, if Sheridan and Associates makes a sale but has not received the cash payment yet, it will not be recorded in their books until the cash is received. Similarly, expenses are only recorded when cash payments are made.
The cash basis is commonly used by small businesses or individuals because it provides a simpler way of tracking cash flow and is easier to understand compared to accrual accounting.