Question

earned $ 115 comma 000 of service revenue during 2016. Of the $ 115 comma 000 ​earned, the business received $ 89 comma 000 in cash. The remaining​ amount, $ 26 comma 000​, was still owed by customers as of December 31. In​ addition, Total Lawn Services incurred $ 68 comma 000 of expenses during the year. As of December 31​, $ 7 comma 000 of the expenses still needed to be paid. In​ addition, Total Lawn Services prepaid $ 12 comma 000 cash in December 2016 for expenses incurred during the next year. 1. Determine the amount of service revenue and expenses for 2016 using a cash basis accounting system.

Answer 1

Answer:

Service Revenue is $89,000 and Service Expenses is $73,000

Under the Cash Basis Accounting System, transactions are only recognized if there is an inflow or outflow of Cash. This is widely practiced in the Public sector.

Explanation:

Service Revenue $89,000

Total Revenue = $89,000

Lawn Service Expenses $61,000

Lawn Service expense prepaid $12,000

Total Expenses = $73,000