In December $2021,$ Orange Island Company received $$40,000$ cash for services that

it will provide in $2022.$ It also paid $$18,000$ cash for the annual insurance policy

effective January $1,2022.$ The net impact of the two transactions in December

$2021$ is:

a$)40,000$ increase in assets under accrual basis; $40,000$ decrease in assets and

$40,000$ increase in liabilities under cash basis.

b$)22,000$ increase in assets and $40,000$ increase in liabilities under accrual

basis; $40,000$ increase in revenue and $18,000$ increase in expenses under

cash basis.

c$)$

$40,000$ increase in assets and $40,000$ increase in liabilities under accrual

basis; $22,000$ increase in assets, $40,000$ increase in revenue, and $18,000$

increase in expenses under cash basis.

d$)22,000$ increase in assets and $40,000$ increase in liabilities under accrual

basis; $40,000$ increase in revenue and $18,000$ increase in expenses under

cash basis.

e$)40,000$ increase in assets and $40,000$ increase in liabilities under both

accrual and cash basis.