QS 3-2 Computing accrual and cash income LO C1 - EDITED for CF As a reminder, Net Income and Cash Flow are NOT the same. Not all revenue is received in cash, and not all expenses are paid in cash. In its first year of operations, Roma Company reports the following: • Earned revenues of $64,000 ($56,000 cash received from customers). Incurred expenses of $35,000 ($26,900 cash paid toward them). Prepaid $11,500 cash for goods/services that will not be used until next year. ● Compute the Company's Cash Flow (Cash Basis) and the Company's Net Income (Accrual Basis) - notice the difference between the two! The Statement of Cash Flows helps explain the difference between Net Income and Cash Flow! X Answer is complete but not entirely correct. Accrual Basis Revenues Expenses Net income Cash Basis $ 56,000 $ 26,900 X 11,500 $ $ 64,000 35,000 29,000

QS 3-2 Computing accrual and cash income LO C1 - EDITED for CF As a reminder, Net Income and Cash Flow are NOT the same. Not all revenue is received in cash, and not all expenses are paid in cash. In its first year of operations, Roma Company reports the following: • Earned revenues of $64,000 ($56,000 cash received from customers). Incurred expenses of $35,000 ($26,900 cash paid toward them). Prepaid $11,500 cash for goods/services that will not be used until next year. ● Compute the Company's Cash Flow (Cash Basis) and the Company's Net Income (Accrual Basis) - notice the difference between the two! The Statement of Cash Flows helps explain the difference between Net Income and Cash Flow! X Answer is complete but not entirely correct. Accrual Basis Revenues Expenses Net income Cash Basis $ 56,000 $ 26,900 X 11,500 $ $ 64,000 35,000 29,000

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter3: The Basics Of Record Keeping And Financial Statement Preparation: Income Statement

Section: Chapter Questions

Problem 34P

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