There's no question what tax year the transaction falls into. The delivery of the goods or services may occur this year and payment next year. It depends on whether you use the cash or accrual method of accounting. Under the accrual method, you generally report the transaction when the goods or services are delivered. Most sole proprietorships and some partnerships operate under the cash method.
Corporations generally operate under the accrual method.
Although most transactions are reported in the year they are paid or accrued, there are some exceptions. The most notable are depreciation and inventory. Depreciation is a deduction that is allowed instead of deducting the cost of buildings or equipment that are used in your business. If the normal accounting conventions were followed, you would deduct the purchase price for these items in the year you paid for them or accrued the obligation to pay. This is not done.