Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting. cash received from customers $48,000 accounts receivable 12,000 cash paid for expenses 26,000 accounts payable (related to expenses) 3,000 prepaid rent for next period 7,000

Question

Business

Anika Short

4 April, 12:01

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting. cash received from customers $48,000 accounts receivable 12,000 cash paid for expenses 26,000 accounts payable (related to expenses) 3,000 prepaid rent for next period 7,000

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Answers (1)

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Erin Knox · Answer 1

The answer is $22,000

Explanation:

Cash basis accounting is a method of recording accounting transactions/events for revenue only when cash is received from customers and expenses only when cash payments are done by the business entity to suppliers.

Net income = Cash received from customers $48,000 - cash paid for expenses 26,000

Net income = $22,000