In Exhibit 15, Kelly Consulting reported accrual net income of $18,300. Under the cash basis of accounting, Kelly Consulting would have reported net income of $15,000.
a. Why are the accrual- and cash-basis net incomes different?
b. Provide an example of an April cash receipt of Kelly Consulting that is recorded differently under the accrual and cash bases of accounting.
c. Provide an example of an April cash payment of Kelly Consulting that is recorded differently under the accrual and cash bases of accounting.
d. From the December transactions of Kelly Consulting, provide an example of a cash payment that is recorded the same under the accrual and cash bases of accounting.
e. Why is the accrual basis of accounting required by generally accepted accounting principles (GAAP)?

Exhibit 15

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Kelly Consulting Income Statement For the Month Ended April 30, 20Y8 Exhibit 15 Financial Statements, Kelly Consulting Fees earned... $23,450 Expenses: Salary expense.. $1,620 Rent expense 1,600 Supplies expense Depreciation expense 850 330 Insurance expense 300 Miscellaneous expense. 450 Total expenses... Net income. (5,150) $18,300 .... Kelly Consulting Statement of Stockholders'Equity For the Month Ended April 30, 20Y8 Common Retained Stock Earnings Total Balances, April 1, 20Y8 Issued common stock $ 0 $ 0 $ 0 30,000 30,000 Net income.... 18,300 18,300 Dividends (6,000) $12,300 (6,000) Balances, April 30, 20Y8 $30,000 $42,300