Danielle's Diamonds is a jewelry store that is owned and operated as a sole proprietorship by Danielle Dawkins that averages $40 million in gross receipts. Danielle uses the cash method of accounting for tax reporting. Which of the following statements is correct for Danielle's business?
Danielle has a choice of reporting gross income under either the accrual method or the cash method even though she uses the cash method otherwise.
Danielle must use the cash method for reporting gross profit in order to be consistent within her business.
Danielle must use the accrual method for reporting gross profit even though she uses the cash method of accounting for everything else.
Danielle must switch to the accrual method for business reporting because she sells products she acquires for resale as her main source of income.