If a company bills $38,000 in completed work and receives payments of $22,000 plus $8,000 from the previous month, what is the net income for the month when using cash accounting?

To determine the net income using cash accounting, it is important to focus on cash inflows and outflows within the specific accounting period. In this scenario, the company has billed a total of $38,000 for work completed, which is recorded as revenue under accrual accounting but does not impact cash accounting directly.

For cash accounting, only the cash received during the period matters. The company has received $22,000 in payments for the current month, in addition to $8,000 collected from the previous month. This means the total cash received in the current month amounts to:

$22,000 + $8,000 = $30,000

Now, for calculating net income, we need to understand if there were any expenses incurred during this period. However, that information is not provided in the question. Since no expenses have been explicitly mentioned, if we assume there are none, we are purely looking at the cash inflows:

Total cash received: $30,000

Total amount billed (but not collected): $38,000

If the company only considers cash for this month's accounting—cash received being less than the billed amount—it indicates that cash flows are not sufficient to cover the expected revenues when considering cash accounting principles. If