In its first year of operations. São Paulo Company earned R$30,000 in service revenue, R$8,000 of…

In its first year of operations. São Paulo Company earned R$30,000 in service revenue, R$8,000 of which was on account and still outstanding at year-end. The remaining R$22,000 was received in cash from customers.The company incurred operating expenses of R$15,500. Of these expenses R$13,000 was paid in cash: R$2,500 was still owed on account at year-end. In addition, São Paulo prepaid R$2,600 for insurance coverage that would not be used until the second year of operations.Instructions(a) Compute the company’s first-year cash flow from operations.(b) Compute the company’s first-year net income under accrual—basis accounting.(c) Which basis of accounting (cash or accrual) provides more useful information for decision maker?View Solution:
In its first year of operations S o Paulo Company earned

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