a. Compare the adjustments necessary on the accounts (income or expense only) of Julie Durkin to reflect (1) a cash-based and (2) an accrual-based accounting system (assume the accounting period is for 12 months ending on 31 December 2015):
i. Accrued wages and salaries of $800 are due to be paid on 1 January 2016.
ii. Julie depreciates her business computer purchased on 1 January 2014 over three years at $600 per annum.
iii. Insurance premium of $12 000 for one year was paid on 1 December 2015.
iv. A client paid Julie $5000 on 1 September 2015 for work not yet done.
v. A client owes $2000 for work started and completed in October 2015.
vi. Julie has tendered for work totalling $2400 on 4 December 2015. She hadn’t heard whether or not she had been successful by 31 December 2015.
vii. Julie paid her quarterly electricity bill of $400 on 30 September 2015.
b. Discuss why the profit for the period is different depending on whether a cash- or accrual-based accounting system is used. Justify the preference to use accrual-based accounting.