Using the accrual basis of accounting, what would be the net income for a company in May if it billed out $12,000?

In the accrual basis of accounting, revenues are recognized when they are earned, regardless of when the cash is received. In this case, if the company billed out $12,000 in May, it indicates that this amount is recognized as revenue for that month.

However, net income is determined not just by the revenue billed but also takes into account expenses incurred during the same period. If the information indicates a net income of $6,000, it likely means that the company incurred operating expenses amounting to $6,000 in May. Therefore, the accrual basis of accounting leads us to subtract these expenses from the total billed revenue.

Thus, the calculation for net income would be:

Net income = Total Revenue - Expenses

Net income = $12,000 - $6,000

Net income = $6,000

This demonstrates an understanding of how accrual accounting works in recognizing earned revenue and matching it against the corresponding expenses to determine net income.