Response to the following questions:
1. Would General Electric and Xerox use the cash basis or the accrual basis of accounting? Explain.
2. How are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of accounting?
3. Fees for services provided are billed to a customer during 2006. The customer remits the amount owed in 2007. During which year would the revenues be reported on the income statement under (a) the cash basis? (b) the accrual basis?