Accrual income versus cash flow for a period
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Accrual income versus cash flow for a period

Accrual income versus cash flow for a period The Motor Corporation sold vehicles for $500,000 to one specific dealer during the year. At the financial year end, the dealer still owed The Motor Corporation $350,000. The cost of the vehicles sold was $400,000, and this cost was incurred and paid by The Motor Corporation.

a. Determine the net profit using the accrual basis of accounting.

b. Determine the net cash flow using the cash basis of accounting.

c. The accountant and financial manager need to present the results to the CEO of The Motor Corporation.

What will be their message regarding the performance of the corporation?

Hint
Accounts & Financea.) Accrual basis of accounting is a method of accounting whre expences or revenues are put on record after an occurence of a transaction rather tahn when payments are made or received. Accrual is the adding together of the investments or interests of something over a certain period of time....

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