Final answer:
Using cash-basis accounting, Swifty's 2022 net income is calculated by subtracting cash paid in expenses from cash received. Since no cash was received from sales on account and other revenues and expenses are related to 2023, the only relevant expense is the cash paid in salaries, which is $1630. Therefore, Swifty's net income for 2022 would be negative $1630, which does not match any of the provided answer options.
Step-by-step explanation:
To calculate Swifty's 2022 net income using cash-basis accounting, we must consider only the cash transactions made during the year. Net income is the excess of revenues over expenses for a certain period. In cash-basis accounting, revenues are recognized when cash is received, and expenses are recognized when cash is paid. The sales made on account are not considered since the cash has not been received yet. Likewise, the $2400 collected for services to be performed in the future is not recognized as revenue since the services are to be rendered in 2023. The expenses include the $1630 in salaries paid and the airline tickets purchased for $240, which are not recognized as expenses until the trip takes place in 2023. Hence, the net income calculation for 2022 is:
Net Income = Cash Received - Cash Paid in Expenses
= $0 (no cash received from sales on account) - $1630 (salaries paid)
= -$1630
None of the answer choices provided (a. $5470, b. $770, c. $530, d. $5230) correctly represent the net income calculated using cash-basis accounting.