Hybrid Accounting Method Definition

Short Definition
The hybrid method of accounting is primarily a blend between the cash and accrual methods but also incorporates other special methods of accounting. The hybrid method is permissible for internal accounting and tax purposes.

Expanded Definition
Hybrid accounting incorporates the cash and accrual methods of accounting and is acceptable for internal accounting as well as tax purposes. However, the Internal Revenue Service has special requirements relating to the use of the hybrid method which focus on line items related to inventory, income, and expenses. The hybrid method must be applied consistently in order to pass IRS scrutiny and be acceptable for internal accounting purposes.

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