please explain why the answer is D

7) In its first year of operations, Grace Company reports the following: Earned revenues of $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash paid toward them); Prepaid $8,000 cash for costs that will not be expensed until next year. Net income under the accrual basis of accounting is: 7) A) $17,000. B) $13,000. $21,000. $25,000. E) None of these options are correct