Answer:
Accrual basis expense is $1,500
Cash basis expense is $6,000
Explanation:
A company that follows accrual basis records expenses when it is incurred irrespective of when it is paid.
The company utilizes supplies in the current period that was purchased in the previous period. So, it will be recorded in the current period as accrual basis expense of $1,500.
Rent paid in advance is a liability for company following accrual basis, so it is not an accrual basis expense. It is a cash basis expense as an expense is recorded when cash is paid under cash basis.
So, cash basis expense is $6,000.
Loan amount repaid is a liability in both cases. So, liability is reduced by $10,000. It is not an expense. Only interest amount is expensed.
