A company incurred $7,000 in expenses on a $12,000 job and received $8,000 from the customer in June. What is the company's net profit for the month of June using accrual accounting?

To determine the company’s net profit for June using accrual accounting, it's important to focus on the revenue recognized and the expenses incurred within that same period.

In this scenario, the company completed a job worth $12,000. Under accrual accounting, revenue is recognized when it is earned, not necessarily when cash is received. As the job was completed, the full $12,000 is recognized as revenue for June, even though the company only received $8,000 in cash from the customer.

Next, expenses of $7,000 were incurred to complete this job, and these should be recognized in the same period as the corresponding revenue. Thus, the expenses are accounted for in June as well.

To calculate the net profit, subtract the total expenses from the total revenue:

Net Profit = Revenue - Expenses

Net Profit = $12,000 - $7,000

Net Profit = $5,000

This leads to a net profit of $5,000 for the month of June under accrual accounting principles. The amount received from the customer does not affect the profit calculation for the month since we’re focused on the work completed and expenses incurred, not just cash transactions.