Chapter 3, Problem S3.2SE

Comparing cash and accrual basis accounting for revenues

Learning Objective 1

Protection Home provides house-sitting for people while they are away on vacation. Some of its customers pay immediately after the job is finished. Some customers ask that the business send them a bill. As of the end of the year, Protection Home has collected $900 from cash-paying customers. Protection Home’s remaining customers owe the business $1,300.

How much service revenue would Protection Home have for the year under the

1. cash basis?
2. accrual basis?