Saturday, October 10, 2020

A company provided $1,500 of services to customers during the month of May. The customers paid in June. What would the impact of these transactions be during May on (1) the balance of cash, (2) cash-basis net income, and (3) accrual basis net income?

A company provided $1,500 of services to customers during the month of May. The customers paid in June. What would the impact of these transactions be during May on (1) the balance of cash, (2) cash-basis net income, and (3) accrual basis net income?


A) (1) No effect, (2) No effect, (3) Increase.

B) (1) No effect, (2) No effect, (3) No effect.

C) (1) Increase, (2) Increase, (3) Increase.

D) (1) Increase, (2) Increase, (3) No effect.


Ch3 answer: A

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