1. 2. 3. Off the Hook Inc. prepared the following condensed income statement using the cash basis of accounting: Additional data: 4. OFF THE HOOK INC. Income Statement, Cash Basis Year Ended December 31, 2023 Sales revenue $820,000 640,000 $180,000 Expenses Net income Depreciation on the company automobile is $9,000. On January 1, 2023, paid for a two-year insurance policy on the automobile amounting to $1,800. Sales revenue does not include $50,000 of goods sold on account in 2023. It does include $20,000 collected in 2023 for 2022 accounts receivable. $50,000 of expenses were incurred in 2023 but won't be paid until 2024.

In the restated statement of income on an accrual basis in conformity with generally accepted accounting principles, explain each change. Off the Hook Inc prepared the following condensed income statement using the cash basis of accounting: Additional data: 1. Depreciation on the company automobile is $9,000. 2. On January 1, 2023, paid for a two-year insurance policy on the automobile amounting to $1,800. 3. Sales revenue does not include $50,000 of goods sold on account in 2023 . It does include $20,000 collected in 2023 for 2022 accounts receivable. 4. $50,000 of expenses were incurred in 2023 but won't be paid until 2024 . Explain which basis (cash or accrual) provides a better measure of net income