[hasy]

Sanni Co. had $150,000 in cash-basis pretax income for the year. At the current year-end, accounts receivable decreased by $20,000 and accounts payable increased by $16,000 from their previous year-end balances. Compared to the accrual-basis method of accounting, Sanni’s cash-basis pretax income is:

Can someone please teach me a trick with these questions because I KNOW I’m not going to answer these right on the exams……

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BEC 80 (10/23/15)
FAR 72 (4/2/15); 83 (7/11/16)
REG 52 (4/28/15)
AUD (9/9/16)

Roger + NINJA MCQ + WTB

[Anonymous]

The $20,000 A/R is cash income but not accrued income because it was already accrued previous year. Similarly, the $16,000 A/P is accrued expense but not cash expense because it has been accrued but not paid. HTH.

[Author]

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