CASH-BASIS AND ACCRUAL-BASIS INCOME Martin Sharp, who repairs lawn mowers, collects cash from his customers when the repair services are completed. He maintains an inventory of repair parts that are purchased from a wholesale supplier. Martin’s records show the following information for the first three months of 2009.

Cash Collected for Repair Work Cost of Repair Parts Purchased Cash Payments to Supplier Cost of Parts Used in Repairs January $2,100 $820 $710 $605 February 1,500 0 440 275 March 1,950 675 0 390 Required:

. Ignoring expenses other than repair parts, calculate net income for each of the three months on a cash basis.

. Ignoring expenses other than repair parts, calculate net income for each of the three months on an accrual basis.

. Why do decision-makers prefer the accrual basis of accounting?