Answer:
Net Income - Cash basis = $10000
Net Income - Accrual basis = $19500
Explanation:
The cash basis of accounting accounts for transactions that occured in cash in the period when cash changes hand. This means that transactions are recorded when the cash is paid or received rather than to the period to which they actually relate to.
Cash basis net income will be,
Net Income = 37000 - 20250 - 6750
Net Income - Cash basis = $10000
The accrual basis of accounting follows that the transactions should be recorded in the period to which they relate to rather then when the cash is paid out or received.
Accrual basis Net income will be,
Net Income - Accrual basis = 45000 - 25500
Net Income - Accrual basis = $19500
