| under cash basis revenue is earned when cash is received, and expenses are incurrred when they are paid.
rev:.......................$33,000
exp........................$24,000
net income...............$9,000
expenses comp:
paid expenses ($22,500 - $2,250)...20,250
prepaid exp...................................$3,750
expense........................................24, 000
under accrual
revenues...........$39,000
expense............$22,500
income..............$16,500 |