In its first year of operations, Carla Vista Co. recognized $33,800 in service revenue, $7,400 of which was on account and still outstanding at year-end. The remaining $26,400 was received in cash from customers. The company incurred operating expenses of $19,300. Of these expenses, $12,800 were paid in cash; $6,500 was still owed on account at year-end. In addition, Carla Vista prepaid $3,210 for insurance coverage that would not be used until the second year of operations. Required:
a. Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting.
b. Which basis of accounting (cash or accrual) provides more useful information for decision-makers?

Haley photocopying purchases a paper from an out-of-state vendor. average weekly demand for paper is 150 cartons per week for which haley pays $15 per carton. in bound shipments from the vendor average 1000 cartoons with an average lead time of 3 weeks. haley operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. the vendor has recently announced that they will be building a faculty near haley photocopying that will reduce lead time to one week. further, they will be able to reduce shipments to 200 cartons. haley believes that they will be able to reduce safety stock to a 1-week supply. what impact will these changes make to haley’s average inventory level and its average aggregated inventory value?