Question - Assume you manage an Art store with various unique paintings. You successfully sale an art piece that you have been trying to sale for $20,000, but your customer only agreed to the purchase because you offered a 50% now and 50% in 3 months. It is November and just a few days before Thanksgiving, and your customer assures you that you will receive 50% in three months and gives you an American Express Card for the 1st 50% payment. With this sale you will exceed your sales goals for the year, and you are definitely thankful for the sale.
Scenario One: Your Company operates using Cash Accounting.
Scenario Two: Your Company operates using Accrual Accounting.
Question: What will the impact be to Net income at the end of the current year for each scenario?