Question $2$ of $10$

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In its first year of operations, Sandhill Co$.$ recognized $$34,720$ in service revenue, $$7,440$ of which was on account and still outstanding at year$-$end. The remaining $$27,280$ was received in cash from customers.

The company incurred operating expenses of $$19,592.$ Of these expenses, $$14,880$ were paid in cash; $$4,712$ was still owed on account at year$-$end. In addition, Sandhill prepaid $$2,976$ for insurance coverage that would not be used until the second year of operations.

$($a$)$ Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting.

$\backslash$table$[[,$Cash Basis,Accrual Basis$],[$Net Income $$,$$$|||,]]$

$($b$)$ Which basis of accounting $($cash or accrual$)$ provides more useful information for decision$-$makers?