ABC Inc. earned revenues of $150,000 in cash and $210,000 on account during 2012. Of the $210,000 on account, $80,000 was collected in cash after the sales date. The company incurred expenses of $125,000 and made related cash payments of $90,000. Compute net income under (a) cash basis accounting and (b) the accrual basis accounting. Which provides a better measurement of net income? Why?

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The Answer of ABC Inc. earned revenues of $150,000 in cash and $210,000 on account during 2012. Of the $210,000 on account, $80,000 was collected in cash after the sales date. The company incurred expenses of $125,000 and made related cash payments of $90,000. Compute net income under (a) cash basis accounting and (b) the accrual basis accounting. Which provides a better measurement of net income? Why?

ABC Inc Earned Revenues of $150,000 in Cash and $210,000 on on Account