Assume that an organization charges $5,000 for its services, but only collects $3,250 for the year 1. The remainder will be collected in the year 2. The organization's only cost is the salary of its manager who earned $4,500, but was only paid $3,750 for the year 1. The balance will be paid in the year 2.

Required

Please use the accrual accounting method to record the revenue and expense for the year 1.

Please use the cash accounting method to record the revenue and expense for the year 1. 

What is the profit or loss to the organization on an accrual basis for the year 1?

If the organization were to stop operating at the end of the year 1 but collected payment ($3,250) and paid its manager ($3,750), what would its cash budget for the year 2 be?

Answer rating: 100% (QA)

Using the accrual accounting method Revenue for Year 1 The organization recognizes revenue when it e... View the full answer