(Learning Objective 1: Comparing cash basis and accrual basis) Elders Consulting had the following selected transactions in August:

❙ Requirements 1. Show how each transaction would be handled using the cash basis and the accrual basis.

2. Compute August income (loss) before tax under each accounting method.

3. Indicate which measure of net income or net loss is preferable. Use the transactions on August 11 and August 24 to explain.