Given the data below for a firm in its first year of operation determine net income under the accrual basis of accounting. $\begin{array} { l r }
\text { Revenue recognized } & \$ 19,000 \
\text { Accounts receivable } & 3,000 \
\text { Expenses incurred } & 7,250 \
\text { Accounts payable (related to expenses) } & 750 \
\text { Supplies purchased with cash } & 1,800
\end{array}$

Question

Given the data below for a firm in its first year of operation determine net income under the accrual basis of accounting. $\begin{array} { l r } 
\text { Revenue recognized } & \$ 19,000 \
\text { Accounts receivable } & 3,000 \
\text { Expenses incurred } & 7,250 \
\text { Accounts payable (related to expenses) } & 750 \
\text { Supplies purchased with cash } & 1,800
\end{array}$

Quizplus · Accepted Answer

Net income under the accrual basis of accounting is calculated as revenue recognized minus expenses incurred. In this case, revenue recognized is $19,000 and expenses incurred are $7,250. Therefore, net income is $19,000 - $7,250 = $11,750.

Given the Data Below for a Firm in Its First