Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. in its first year of operations, crane company rec

In its first year of operations, Crane Company recognized $35,280 in service revenue, $7,560 of...

60.1K

Verified Solution

Question

Accounting

In its first year of operations, Crane Company recognized $35,280 in service revenue, $7,560 of which was on account and still outstanding at year-end. The remaining $27,720 was received in cash from customers.
The company incurred operating expenses of $19,908. Of these expenses, $15,120 were paid in cash; $4,788 was still owed on account at year-end. In addition, Crane prepaid $3,024 for insurance coverage that would not be used until the second year of operations.
(a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting.
\table[[,Cash Basis,Accrual Basis],[Net earnings ,,]]
(b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers?
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

Given a right triangle with one leg length of a, one leg length of x-3 and...

Biology
1.2K views

What is epithelial-mesenchymal transition? Name couple examples.

Mechanical Engineering
1.2K views

: For your selected gears, determine the following: center distance, pitch circle diameter, outer diameter (or addendum...

Physics
1.2K views

To su p 51 Which of the following graphs closely represents the variation in kinetic...

Basic Math
1.2K views

Use only sin 30 0 30 0 0 0 and sin 30 30 0 30...

Calculus
1.2K views

2 Find the points on the surface z xy 9 closest to the origin The...

Accounting
1.2K views

Many business incur net operating losses, especially in the early years of their existence. What...

Accounting
1.2K views

The follow account totals appear in the Balance Sheet of the Light Saber Ltd: ...

Accounting
1.2K views

Levine Company uses the perpetual inventory system. April 8 Sold merchandise for $8,400(that had...

Accounting
1.2K views

Exercise 3.5 (Solution on page 69) Record the following transactions in a set of double-entry...

Accounting
1.2K views

Homework: S9-14 Save Score: 0 of 4 pts 1 of 1 (0 complete) v HW...

Finance
1.2K views

Tommy Horvaths Manufacturing is evaluating the purchase of a new machine that will cut labor...