Packers Inc. reported the following information for their 2020 fiscal year:

DebtCredit

Revenue on the income statement $171,000

Accounts receivable, Jan 1 4,800

Accounts receivable, Dec 31 9,180

Unearned revenue, Jan 1 1,800

Unearned revenue earned in 2020300

Unearned revenue, Dec 31 2,760

Instructions

a) Calculate the revenue for the year on a cash basis.

b) Calculate the revenue for the year on an accrual basis.

c) Explain the theoretical weaknesses of the cash basis approach. Isn't cash management the most important part of a business?