I have very little cash and yet he says that I had a good year with $15,000 net income. He said it was because we use accrual accounting (whatever that means). I know I paid 6 month's rent ($1,400 a month) in advance at the end of the year. I also paid my insurance for the next year. Insurance cost $6,000. I have several customers who had a lot of services done on credit and haven't paid yet. I think that totals $11,948 owed to me. Can you explain?

Question

Hess

Mathematics

29 December, 11:36

I have very little cash and yet he says that I had a good year with $15,000 net income. He said it was because we use accrual accounting (whatever that means). I know I paid 6 month's rent ($1,400 a month) in advance at the end of the year. I also paid my insurance for the next year. Insurance cost $6,000. I have several customers who had a lot of services done on credit and haven't paid yet. I think that totals $11,948 owed to me. Can you explain?

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Ivy Maldonado · Answer 1

Step-by-step explanation:

Accrual - the accumulation or increase of something over time, especially payments or benefits.

(Accumulation Accounting)

Net Income: $15,000

Spent: 6 ($1,400) + $6,000

$8,400+$6,000 = $14,400

Current Total (In-hand) : $600

Not Been Paid Yet (Not In-hand) : $11,948