When I accepted subsidy, I still used the cash method. I'm assuming your daycare is a center with employees? One thing to consider with the accrual method is that it doesn't offer an accurate picture of your bank account. The cash method is much more accurate when you have a lot of flow in/out and have to be 100% certain that the cash is there for paychecks/withholding and such. With accrual, you may show the subsidy on your income ledger, but if it's not really in the bank you may run into a cash shortage problem.

Good luck!

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