question 15\npetes pressure washing prepares its financial statements annually using the accrual basis of…

question 15\npetes pressure washing prepares its financial statements annually using the accrual basis of accounting. during the month of june, accounts payable increased by $800. would the company appear more profitable during june if it used the cash basis of accounting? why or why not?\na no. cash - basis net income would be $800 less than accrual - basis net income.\nb no. cash - basis income would be $800 more than accrual - basis net income.\nc yes. cash - basis net income would be $800 more than accrual - basis net income.\nd yes. cash - basis net income would be $800 less than accrual - basis net income.

question 15\npetes pressure washing prepares its financial statements annually using the accrual basis of accounting. during the month of june, accounts payable increased by $800. would the company appear more profitable during june if it used the cash basis of accounting? why or why not?\na no. cash - basis net income would be $800 less than accrual - basis net income.\nb no. cash - basis income would be $800 more than accrual - basis net income.\nc yes. cash - basis net income would be $800 more than accrual - basis net income.\nd yes. cash - basis net income would be $800 less than accrual - basis net income.

Answer

Brief Explanations:

Under accrual - basis accounting, an increase in accounts payable means an expense has been recognized but not yet paid in cash. Under cash - basis accounting, this expense would not be recognized until cash is paid out. So, the cash - basis net income would be higher by the amount of the increase in accounts payable ($800) as the expense is not deducted yet.

Answer:

C. Yes. Cash - basis net income would be $800 more than accrual - basis net income.