Multiple Choice 4-8 A company prepays rent of $500 and receives a $3,000 payment for services not yet rendered. Under the accrual basis of accounting, these two transactions will: a. increase net income $2,500. b. increase net income $3,000. c. decrease net income $500. d. have no effect on net income.

8. Multiple Choice 4-9 A company has $3,000 of supplies on hand at the beginning of the year. During the year, the company buys $7,500 of supplies. At the end of the year, supplies on hand total $4,000. What is the amount of Supplies Expense reported on the company's income statement? a. $4,000 b. $7,500 c. $6,500 d. $10,500