Question

In its first year of operations, Roma Company reports the following. Earned revenues of $54,000 ($46,000 cash received from customers). Incurred expenses of $30,000 ($23,400 cash paid toward them). Prepaid $9,000 cash for costs that will not be expensed until next year.

Answer 1

Answer:

The Net Income in terms of Cash is $13600 while that of accrual basis is $24000.

Explanation:

As the complete question is not given, a similar  question is found online and is attached herewith.

By using the given data

Cash Values are given as

Revenues=$46000

Expenses Paid=$23400

Prepaid Cost=$9000

Total Expense Cash=Expense Paid +Prepaid Cost

Total Expense Cash=$23400 +$9000

Total Expense Cash=$32400

So the Net Income in terms of Cash is given as

Cash Net Income=Cash Revenue-Total Expense Cash

Cash Net Income=$46000-$32400

Cash Net Income=$13600

So the Net Income in terms of Cash is $13600.

Cash Values are given as

Earned Revenues=$54000

Incurred Expenses=$30000

So the Net Income in terms of Accrual is given as

Accrual Net Income=$54000-$3000

Accrual Net Income=$24000

So the Net Income in terms of Accrual  is $24000.