What is Ling's 2013 net income using cash basis accounting?
A) ¥23,500.
B) ¥5,500.
C) ¥22,500.
D) ¥4,500.

Question

Quizplus · Accepted Answer

Based on cash basis accounting, net income is calculated by subtracting total expenses from total revenue. 
Total revenue for Ling in 2013 is:
¥8,000 + ¥9,500 + ¥7,500 = ¥25,000 
Total expenses for Ling in 2013 is:
¥10,000 + ¥6,000 + ¥4,000 = ¥20,000 
Therefore, Ling's net income using cash basis accounting is:
¥25,000 - ¥20,000 = ¥5,000 
However, Ling also received ¥500 of cash collected from customers in 2012, which should be included in the calculation. 
Therefore, Ling's net income using cash basis accounting is:
¥5,000 + ¥500 = ¥4,500.

What Is Ling's 2013 Net Income Using Cash Basis Accounting