Question 3 of 6. View Policies Current Attempt in Progress In its first year of operations, Pharoah Company recognized $25,760 in service revenue, $5,520 of which was on account and st outstanding at year-end. The remaining $20,240 was received in cash from customers. The company incurred operating expenses of $14,536. Of these expenses, $11,040 were paid in cash; $3,496 was still owed on account at year-end. In addition, Pharoah prepaid $2,208 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting. Net Income Cash Basis Accrual Basis (b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers? eTextbook and Media