Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. $$\begin{array} { l r }
\text { Revenue earned } & \$ 16,000 \
\text { Accounts receivable } & 3,000 \
\text { Expenses incurred } & 7,250 \
\text { Accounts payable (related to expenses) } & 750 \
\text { Supplies purchased with cash } & 1,800
\end{array}$$
A) $8,750
B) $11,000
C) $6,500
D) $9,200

Question

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. $$\begin{array} { l r } 
\text { Revenue earned } & \$ 16,000 \
\text { Accounts receivable } & 3,000 \
\text { Expenses incurred } & 7,250 \
\text { Accounts payable (related to expenses) } & 750 \
\text { Supplies purchased with cash } & 1,800
\end{array}$$
A) $8,750
B) $11,000
C) $6,500
D) $9,200

Quizplus · Accepted Answer

Net income under the accrual basis is calculated as Revenue earned ($16,000) minus Expenses incurred ($7,250), which equals $8,750. Accounts receivable and accounts payable do not affect the calculation of net income under the accrual basis.

Given the Data Below for a Firm in Its First