What is Melody's Net Income for May using the accrual basis of accounting?
A) $250
B) $300
C) $350
D) $600

Question

Quizplus · Accepted Answer

Melody's revenue for the month of May was $500 for lessons provided. Her expenses for the month included $50 for gas expense and $100 for equipment maintenance expense which gives a total of ($50 + $100) $150 in expenses for May. Using accrual basis of accounting, we must recognize the revenue when it is earned and expenses when they are incurred, regardless of when cash is received or paid. Hence, her net income for May can be calculated as follows:
Net Income = Revenue - Expenses
Net Income = $500 - $150
Net Income = $350

What Is Melody's Net Income for May Using the Accrual