Answer :-
A. Cash basis = $12,000
Under cash basis of accounting, the actual cash payment made for the expense shall be recorded as expense. Revenues are recognized when cash is received and expenses are recorded when cash is paid.
B. Accrual basis = $3,000 ( $12,000/8*2)
Under accrual basis, Revenues are recognized when earned and expenses are recognized when incurred. So the advertising expenses will be recorded for only 2 months.
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