The (Accrural-basis, Cash Basis) measure of net income is preferable because it accounts for revenues and expenses when they ( are received or paid in cash, occur) not when they ( are received or paid in cash, occur)

For example on July 11 the company (collected, earned) $3100 of revenue and increased its wealth as a result. The (accrual, cash) basis records this revenue, but the (accrual, cash) basis ignores it.

On July 24 the business collected the recieable that was created by the revenue earned on account at July 11th. The (accrual, cash) basis records no revenue on July 24th because the company's increase in wealth occurred back in July 11th. The (accrual, cash) basis waits until cash Is received on July 24th to record the revenue. This is ( too early, too late)

Julv July July July Julv July July July July July July July Prepaid insurance for July through September, $2,250. Purchased office furniture for cash, $4,500. 5 Performed services and received cash, $1,100. 8 Paid advertising expense, $200. 11 Performed service on account, $3,100. 19 Purchased computer on account, $1,500. 24 Collected for July 11 service. 26 Paid account payable from July 19. 29 Paid salary expense, $800. 31 Adjusted for July insurance expense (see July 1). 31 Earned revenue of $800 that was collected in advance back in June. 31 Recorded July depreciation expense on all fixed assets, $360.

Requirement 1. Show how each transaction would be handled using the cash basis and the accrual basis. Under each column, give the amount of revenue or expense for July using the cash basis and the accrual basis. (Enter "0" for any transactions that do not affect revenues or expenses. Use parentheses or a minus sign when entering expenses or losses. Round your answers to the nearest whole dollar.) July Date Amount of Revenue (Expense) for July Cash Basis Revenue or (Expense) Income (loss) before tax 1 4 5 8 11 19 24 26 29 31 31 31 Accrual Basis Revenue or (Expense) Requirement 2. Calculate July income (loss) before tax under each accounting method. Requirements 1. Show how each transaction would be handled (in terms of recognizing revenues and expenses) using the cash basis and the accrual basis. 2. Calculate July income (loss) before tax under each accounting method. 3. Indicate which measure of net income or net loss is preferable. Use the transactions on July 11 and July 24 to explain. Print Done X Requirement 3. Indicate which measure of net income or net loss is preferable. Use the transactions on July 11 and July 24 to explain. measure of net income is preferable because it accounts for revenues and expenses when they The For example, on July 11, the company On July 24, the business collected the receivable that was created by the revenue earned on account at July 11. The July 24, to record the revenue. This is $3,100 of revenue and increased its wealth as a result. The not when they basis records this revenue, but the basis ignores it. basis records no revenue on July 24 because the company's increase in wealth occurred back on July 11. The basis waits until cash is received, on