In its first year of operations, Anya Company recognized $30,000 in service revenue, $4,800 of which was on account and still outstanding at year-end. The remaining $25,200 was received in cash from customers. The company incurred operating expenses of $17,000. Of these expenses $12,000 was paid in cash; $5,000 was still owed on account at year-end. In addition, Anya prepaid $2,600 for insurance coverage that would not be used until the second year of operations.Instructions(a) Compute Anya’s first-year cash flow from operations.(b) Compute Anya’s first-year net income under accrual-basis accounting.(c) Which basis of accounting (cash or accrual) provides more useful information for decision-makers?View Solution:
In its first year of operations Anya Company recognized 30 000