In its first year of operations, Roma Company reports the following:
∙ Earned revenues of $45,000 ($37,000 cash received from customers).
∙ Incurred expenses of $25,500 ($20,250 cash paid toward them).
∙ Prepaid $6,750 cash for costs that will not be expensed until next year.
Compute the company's first-year net income under both the cash basis and the accrual basis of accounting.