During 2014, Valley Sales Inc. earned revenues of $500,000 on account. Valley Sales collected $410,000 from customers during the year. Expenses totaled $420,000, and the related cash payments were $400,000. Show what Valley Sales would report on its 2014 income statement under the
a. Cash basis
b. Accrual basis
Compute net income under both bases of accounting. Which basis measures net income more appropriately? Explain your answer.