Should use the cash or accrual method of accounting

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Reference no: EM133265585

Question: Mr. Collins opened his business, ABC Industries, in February 2020. Since opening ABC has:

Billed Clients $3 million
Collected $2.4 million from clients
Generated $900,000 in operating expenses
Paid $760,000 of their bills
Mr. Collins suspects that he will, collect on outstanding debt and pay his current bills by February 2021.

Mr. Collins would like to know if he should use the cash or accrual method of accounting?

Would using a 4% discount rate to compute the net present value change your answer?

Reference no: EM133265585

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