E3-18A. (Learning Objective 1: Linking accrual accounting and cash flows) During 20X7, Plateau Sales, Inc., earned revenues of $590,000 on account. Plateau collected $610,000 from customers during the year. Expenses totaled $450,000, and the related cash payments were

$460,000. Show what Plateau would report on its 20X7 Income Statement under the

a. cash basis.

b. accrual basis.

Compute net income under both bases of accounting. Which basis measures net income better?

Explain your answer.