Final answer:
The cash method of accounting is advantageous for simplicity, tax benefits, and for businesses with fluctuating income or those that are service-based without inventory, as it aligns income with actual cash flow.
Step-by-step explanation:
The cash method of accounting may be advantageous in comparison to the accrual basis under certain conditions. One of the main advantages is simplicity, as it involves recording transactions only when cash changes hands, making it easier for small businesses to track finances and prepare financial records.
Furthermore, the cash method can offer tax advantages by deferring the recognition of income until it is actually received, which can be beneficial for managing cash flow and timing of tax payments.
Another situation where the cash method could be preferable is when a business has significant fluctuating income. In such scenarios, the cash method can provide a more accurate reflection of the funds that are available at any given time.
Lastly, businesses that do not have inventory or that are service-based may find the cash method more conducive since it aligns income recording with actual cash flow.