Solution-Explain which measure of net income or net loss

Explain which measure of net income or net loss preferable

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Reference no: EM132506775

Academic Consultants Inc. had the following selected transactions in August 2016:

Aug. 1Prepaid insurance for August through December, $1,0004

Purchased software for cash, $8005

Performed service and received cash, $9008

Paid advertising expense, $30011

Performed service on account, $3,00019

Purchased computer on account, $1,60024

Collected for the August 11 service26

Paid account payable from August 1929

Paid salary expense, $90031

Adjusted for August insurance expense (see Aug 1)31

Earned revenue of $800 that was collected in advance in July1

Question 1: Show how each transaction would be handled using the cash basis and the accrual basis. Under each column, give the amount of revenue or expense for August. Journal entries are not required. Use the following format for your answer and show your computations.

Question 2: Compute August income (loss) before tax under each accounting method.

Question 3: Explain which measure of net income or net loss is preferable.

Reference no: EM132506775

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Explain which measure of net income or net loss preferable

Reference no: EM132506775

Reference no: EM132506775

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