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

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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?
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