During the last five months of the year, Dwana opens a new internet telecommunications business called Dwan-Com. Dwan-Com bills $50,000 of revenues, but receives only $40,000 cash. Dwan-Com incurs $3,000 of supply expenses, and $41,000 of labor costs. Dwan-Com pays for $2,200 of the supplies and $38,000 of the labor costs in the current year.
Required:
a. Under the cash method, Dwan-Com has a net of $.b. Dwan-Com's taxable income under the accrual method is $.c. What method of accounting do you recommend that Dwan-Com elect?

Under the cash method Dwan-Com has a net taxable loss of $200 as computed below.

Under the accrual method Dwan-Com has a taxable income of $6000.

The appropriate method to be chosen by Dwan-Com is a function of perception:

From a cash flow point of view,it would be advisable to choose cash method since that results in no payment of taxes now .

On other hand,when looking at tax minimization strategy, it is more preferable to choose accrual method as that method leads to lower taxes overall.

Explanation:

Cash Method                   $

Cash received                  40000

Cash paid:

Supplies                           (2200)

Labor costs                      (38000)

Net tax loss                       (200)

Accrual Method                   $

Revenue                            50,000

Expenses incurred:

Supplies                            (3000)

Labor costs                       (41000)

Taxable income                 6000

administrative jobs normally have someone answering phone calls and scheduling appointments, filing patient or customer information, making sure the front of the office looks nice to those who enter the building. administrative jobs can also include making sure the manager has everything they need for meetings, making delivers and much more. administrative jobs are important to most businesses as are customer service focused as they are often one of the first impressions a consumer sees of a business.

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