To demonstrate the difference between cash account activity and accrual basis profits (net income), note the amount each transaction affects cash and the amount each transaction affects net income.
A. Paid balance due for accounts payable $6,900
B. Charged clients for legal services provided $5,200
C. Purchased supplies on account $1,750
D. Collected legal service fees from clients for current month $3,700
E. Issued stock in exchange for a note payable $10,000