Finn Fixes is a new charity that repairs donated cars for use by unemployed job seekers. Finn collects the cars from area junkyards. The first year Finn is in operation, jobs programs bought cars from...

Finn Fixes is a new charity that repairs donated cars for use by unemployed job seekers. Finn collects the cars from area junkyards. The first year Finn is in operation, jobs programs bought cars from the organization for
60,000. They paid Finn
45,000 during the year and owe
15,000. Finn uses donated, unskilled labor and free garage space at a local high school. Its only cost is for parts. Total parts cost
58,000 for the year. During that first year Finn paid its parts suppliers
52,000. It owes its suppliers the balance.

1. What is the profit or loss to Finn Fixes on a cash basis?

2. What is the profit or loss to Finn Fixes on an accrual basis?

3. If Finn Fixes were to stop operating at the end of the first year but received payment from the jobs programs and paid its suppliers, what would its cash budget for the next year be?

4. How much cash would Finn Fixes have on hand at the end of the second year? How does that amount compare to its budgeted accrual basis profit or loss for the first year?

5. Which basis reflects the long-term stability of the organization?