Answer:
Higher by $36000
Explanation:
Given: Cash income= $150000
Accural basis method of recording transaction in real time as income is recorded when it is earned and expenses are recorded, when it is incurred.
Cash‐basis pre‐tax income $150,000
Decrease in accounts receivable = $20,000
In the given case, The Account Receivable (AR) decrease by $20,000 implies that cash received on account was $20,000 greater than accrual sales.
Increase in accounts payable = $16,000 .
The accounts payable increase by $16,000 implies that more inventory was purchased and included in accrual cost of goods sold than was paid.
Accrual‐basis income $186,000 This cash pretax income is $36,000 [tex]($186,000 - $150,000)[/tex] higher than the accrual‐basis income.
