Given the distinction between the accrual basis accounting and cash basis accounting, this question asks you to prepare for an accrual based operating budget and a cash budget for the Finn Fixes Finn Fixes is a new charity that repairs donated cars for use by unemployed job seekers Finn collects the cars from area junkyards The first year Finn is in operation, jobs programs bought cars from the organization for $60,000 They paid Finn $45,000 during the year and owe $15,000 Finn uses donated, unskilled labor and free garage space at a local high school Its only cost is for parts Total parts cost $58,000 for the year During that first year Finn paid its parts suppliers $52,000 It owes its suppliers the balance What is the profit or loss to Finn Fixes on a cash basis for the first year (Note if there is a loss, please indicate the amount of loss in the parenthesis) (5 points) The cash basis for the first year is (7,000) b What is the profit or loss to Finn Fixes on an accrual basis for the first year (5 points) The profit for the Finn Fixes on an actual basis for the first year is 2,000 c) If Finn Fixes were to stop operating at the end of the first year but received payment from the jobs programs and paid its suppliers, what would its cash budget for the next year be The payment from the job programs and suppliers cash budget for the following year would be $9,000 How much cash would Finn Fixes have on hand at the end of the second year How does that amount compare to its budgeted accrual basis profit or loss for the first year Finn Fixes should have $2,000 cash, which is the same as accrual basis Accrual reflects the long term stability of Finn Fixes Any revenue or expenses are recorded when the transaction takes place and not when the cash is actually payed

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Given the distinction between the accrual basis accounting and cash basis accounting, this question asks you to prepare for an accrual based operating budget and

Given the distinction between the accrual basis accounting and cash basis accounting, this question asks you to prepare for an accrual based operating budget and a cash budget for the Finn Fixes.

Finn Fixes is a new charity that repairs donated cars for use by unemployed job seekers. Finn collects the cars from area junkyards. The first year Finn is in operation, jobs programs bought cars from the organization for $60,000. They paid Finn $45,000 during the year and owe $15,000. Finn uses donated, unskilled labor and free garage space at a local high school. Its only cost is for parts. Total parts cost $58,000 for the year. During that first year Finn paid its parts suppliers $52,000. It owes its suppliers the balance.

What is the profit or loss to Finn Fixes on a cash basis for the first year? (Note: if there is a loss, please indicate the amount of loss in the parenthesis) (5 points)

The cash basis for the first year is (7,000).

b. What is the profit or loss to Finn Fixes on an accrual basis for the first year? (5 points)

The profit for the Finn Fixes on an actual basis for the first year is 2,000.

c) If Finn Fixes were to stop operating at the end of the first year but received payment from the jobs programs and paid its suppliers, what would its cash budget for the next year be?

The payment from the job programs and suppliers cash budget for the following year would be $9,000.

How much cash would Finn Fixes have on hand at the end of the second year? How does that amount compare to its budgeted accrual basis profit or loss for the first year? Finn Fixes should have $2,000 cash, which is the same as accrual basis. Accrual reflects the long-term stability of Finn Fixes. Any revenue or expenses are recorded when the transaction takes place and not when the cash is actually payed.