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Accrual Basis of Accounting versus Cash Basis of Accounting On December 31, Hermani Patterson completed his first year as a financial planner. The following data are available from his accounting records Fees billed to clients for services rendered $97,700 Rent expense for year just ended $10,800 Cash received from clients Supplies purchased for cash Supplies used during the year Cash paid for rent (rent is paid through Feb. of next year) 85,000 Utility expense incurred 4,000 Utility bills paid 3,300 Salary earned by assistant 30,000 Salary paid to assistant 27,000 12,000 a. Compute Hermani's net income for the year just ended using the accrual basis of accountin b. Compute Hermani's net income for the year just ended using the cash basis of accounting c. Which net income amount is computed in accordance with generally accepted accounting principles? Accrual

Accrual Basis of Accounting versus Cash Basis of Accounting On December 31, Hermani Patterson completed his first year as a financial planner. The following data are available from his accounting records Fees billed to clients for services rendered $97,700 Rent expense for year just ended $10,800 Cash received from clients Supplies purchased for cash Supplies used during the year Cash paid for rent (rent is paid through Feb. of next year) 85,000 Utility expense incurred 4,000 Utility bills paid 3,300 Salary earned by assistant 30,000 Salary paid to assistant 27,000 12,000 a. Compute Hermani's net income for the year just ended using the accrual basis of accountin b. Compute Hermani's net income for the year just ended using the cash basis of accounting c. Which net income amount is computed in accordance with generally accepted accounting principles? Accrual

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Accrual Basis of Accounting versus Cash Basis of Accounting On December 31, Hermani Patterson completed his first year as a financial planner. The following data are available from his accounting records Fees billed to clients for services rendered $97,700 Rent expense for year just ended $10,800 Cash received from clients Supplies purchased for cash Supplies used during the year Cash paid for rent (rent is paid through Feb. of next year) 85,000 Utility expense incurred 4,000 Utility bills paid 3,300 Salary earned by assistant 30,000 Salary paid to assistant 27,000 12,000 a. Compute Hermani's net income for the year just ended using the accrual basis of accountin b. Compute Hermani's net income for the year just ended using the cash basis of accounting c. Which net income amount is computed in accordance with generally accepted accounting principles? Accrual
Transcribed Image Text:Accrual Basis of Accounting versus Cash Basis of Accounting On December 31, Hermani Patterson completed his first year as a financial planner. The following data are available from his accounting records Fees billed to clients for services rendered $97,700 Rent expense for year just ended $10,800 Cash received from clients Supplies purchased for cash Supplies used during the year Cash paid for rent (rent is paid through Feb. of next year) 85,000 Utility expense incurred 4,000 Utility bills paid 3,300 Salary earned by assistant 30,000 Salary paid to assistant 27,000 12,000 a. Compute Hermani's net income for the year just ended using the accrual basis of accountin b. Compute Hermani's net income for the year just ended using the cash basis of accounting c. Which net income amount is computed in accordance with generally accepted accounting principles? Accrual
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