Choose from the following list of terms/phrases to best complete the statements below.

a. Fiscal year

d. Accounting period g. Natural business year

b. Timeliness

e. Annual financial statements h. Time period assumption

c. Calendar year

f. Interim financial statements i. Quarterly statements 1. presumes that an organization’s activities can be divided into specific time periods.

2. Financial reports covering a one-year period are known as .

3. A(n) consists of any 12 consecutive months.

4. A(n) consists of 12 consecutive months ending on December 31.

5. The value of information is often linked to its.

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.