Homework Answers
Under the accrual basis of accounting, the income is recognized as they are earned and expenses are recognized during the period when the revenues relating to such expenses were earned. Based on the observation of the question, we can calculate the Accrual Net income for SRC as follows:-
Net Income = Revenue Earned - Expenses incurred, including depreciation
Net Income = $700 - $146
Net Income = $554
Based on the above calculation, the correct answer is Option D - $554.
Option A is incorrect. $60 is the net income if the company had followed the cash basis of accounting. Hence this option is incorrect.
Option B and Option C are incorrect based on the above calculations.
Please let me know if you have any questions via comments and all the best :)
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