Nancy is a sole practitioner operating an accounting firm west of Sydney, Australia. Her firm is small practice with five regular employees (two of whom are close family members of Nancy's. These employees are not qualified accountants, and so Nancy takes responsibility for all work that emanates from her office, and as such, Nancy reviews all outputs before being finalised. On infrequent occasions Nancy hires an assistant accountant to do particular work for the practice, For the duration that Nancy has operated the firm, all business records and income tax returns are prepared on a cash basis, although a couple of years ago Nancy upgraded to cloud based accounting technology. With this in mind, apart from one or two clients, who are billed on a quarterly basis clients are billed when work is completed. For the current tax year, Nancy billed $550,000 in completed work, whilst receiving $380,000 of these cash receipts ($30,000 in cash receipts related to the prior Income tax year). No substantial credit is given or relied on by Nancy's practice. In June of the current tax year, Nancy received the following invoices a) Electricity bill relating to the firm's office of $2,000, as at 30 June, Nancy had not yet paid the invoice. b) Subscription renewal for The Australian Financial Review for $120. As at 30 June, Nanay had not yet paid the invoice. Nancy also paid $150 speeding fine, incurred when running late for a client meeting and $450 to her membership to the local basketball club, both in May 2020. REQUIRED: Advise Nancy of the tax consequences in regard to the above fact situation by answering the following four questions: 1. Advise Nancy on whether the cash basis or accrual basis of income derivation is most appropriate for the accounting firm. (5 marks) 2. Advise Nancy of the amount of ordinary income derived in the current income tax year. (2 mark) 3. Advise Nancy as to whether the two unpaid invoices are "incurred" for the purposes of deducting in current income tax year pursuant to section 8-1 ITAA 1997. (4 marks) 4. Advise Nancy on the deductibility of the two payments made in May 2020, for the current income tax year. (2 marks) Your answer should include references to appropriate legislation, case law and tax rulings. Disregard GST