Michael Jordan has just started a charity reprogramming old cell phones for use by battered women. Michael has arranged to get the phones free from electronic stores around town. The first year shelters buy $2,000 worth of phones from michael paying him $1,500 and owing $500. Michael's only cost is an activation fee paid to the phone company. Total phone company fees were $1,800 for the year and Michael paid $1,600. Answer all three below.
A. What is the profit or loss to Michael's charity on a cash basis?
B. What is the profit or loss to Michael's charity on an accrual basis?
C. Which basis reflects long-term stability of the business?