Question

edugen.wileyplus.com WileyPLUS Nash's Trading Post, LLC had the following transactions durin Return to Blackboard VPLUS Help System Announcements DIII Kimmel, Financial Accounting, 9e TIMER RESOURCES Multiple Choice Question 82 Nash's Trading Post, LLC had the following transactions during 2021: 88 • Sales of $7990 on account • Collected $3550 for services to be performed in 2022 • Paid $1920 cash in salaries for 2021 • Purchased airline tickets for $440 in December for a trip to take place in 2022 What is Nash's 2021 net income using accrual accounting? H $6070 $6510 $9620 $10060 Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer:

$6070

Explanation:

Unlike cash basis of accounting which recognizes revenues when they are received and expenses when they are paid, accrual basis of accounting recognizes revenue when they are earned and expenses when they are billed , and not when they are paid.

In this question,

For calculating net income of 2021, revenue or expenses which are accrued on 2021 is only to be considered.

Revenue :

Sales on account = $7,990

Expenses:

Paid salaries for 2021 = $1,920

Net income using accrual accounting =

Revenue - Expenses

= $7,990 - $1,920

= $6,070

Note:

Revenue collected for services to be rendered in 2022 and expenses for airline tickets to take place in 2022 is not to be considered.