Measurement of Income You are planning to invest in either Company A or Company C. In making your decision, you want to project future income and future cash flows for each company. The following information was made available by the companies:

Company A has measured income on the accrual basis, while Company C has measured income using cash receipts and disbursements. Identify and describe the differences in the measures used by the two companies and indicate how these differences will affect your comparison of the companies.

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Company A Income Statement Year Ended December 31, 2000 Revenues Costs and expenses Operating income Gain from sale of building Interest income from temporary investment Net Income Company C Income Statement Year Ended December 31, 2000 Cash receipts: Collected from sales Sale of building $15,000 (10,000) $ 5,000 10,000 2,000 $17,000 $18,000 45.000 Interest income Total receipts Cash payments: Costs and expenses paid Purchase of delivery trucks Distribution to owners Total payments Net cash flow 1,000 $64,000 $ 8,000 30,000 5,000 ($43,000) $21,000