Question: Savor Co . had USD 1 0 0 , 0 0 0 in cash - basis pretax income for the calendaryear 1 9 9 0

Savor Co.had USD 100,000 in cash-basis pretax income for the calendaryear 1990. At December 31,1990, accounts receivable had increased by USD 10,000 and account payable had decreased by USD 6,000 from their December 31,1989 balances. Compared to the accrual basis method of accounting, Savor's cash pretax income is?
Answer
Lower by USD 16,000
Lower by USD 4,000
Higher by USD 16,000
Higher by USD 4,000
Savor Co . had USD 1 0 0 , 0 0 0 in cash - basis

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