Requirements

1.

Show whether each transaction would be handled as a revenue or an expense using both the cash basis and accrual basis accounting systems by completing the table provided. (Expenses should be shown in parentheses.) Also, indicate the dollar amount of the revenue or expense. The

May

1 transaction has been completed as an example.

Amount of Revenue (Expense) for May
Date	Cash Basis Amount of Revenue (Expense)	Accrual Basis Amount of Revenue (Expense)
May 1	$(1,500)	$0

2.

After completing the table, calculate the amount of net income or net loss for

Calorie

Catering under the accrual basis and cash basis accounting systems for

May.

3.

Considering your results from Requirement 2, which method gives the best picture of the true earnings of

Calorie

Catering? Why?

Requirement 1. Show whether each transaction would be handled as a revenue or an expense using both the cash basis and accrual basis accounting systems by completing the table provided. (Expenses should be shown in parentheses.) Also indicate the dollar amount of the revenue or expense.

The May 1 transaction has been completed as an example. (Enter "0" for any transactions that do not affect revenues or expenses.)

Amount of Revenue (Expense) for May
			Cash Basis Amount			Accrual Basis Amount
Date			of Revenue (Expense)			of Revenue (Expense)
May 1				$(1,500)			$0