Mr. Collins opened his business, ABC Industries, in February 2020. Since opening ABC has:

Billed Clients $3 million and collected $2.4 million from clients

Generated $900,000 in operating expenses and paid $760,000 of their bills

Mr. Collins suspects that he will, collect on outstanding debt and pay his current bills by February 2021.

a. Mr. Collins would like to know if he should use the cash or accrual method of accounting?

b. Would using a 4% discount rate to compute the net present value change your answer?