If a company incorrectly records cash received for services to be provided in the future with a debit to cash and a credit to sales revenue, this error affect net income for the current period through the net income will be too high.
What is net income?
Net income is defined as an entity's earnings less expenses, amortization, depreciation and dividends, and taxes for a specific accounting period in both professional accounting.
Net income is the amount that a person or business makes after expenses, reimbursements, and taxes.
Therefore,
If a company incorrectly records cash received for services to be provided in the future with a debit to cash and a credit to sales revenue, this error affect net income for the current period through the net income will be too high.
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$2,000 is the amount of money that the Development associates may recover. When the Eastside fails to go through with the deal on the agreed date, when the market price of the land is $17,000 then the price of the land on the agreed date is only $15,000. So the DA may recover the $2,000.
The correct option is B - Opportunity Cost
<u>Explanation:</u>
Generally, an opportunity cost is the benefit that you gave up when you pass on that option in favor of another option. For instance, by choosing to purchase furniture instead of taking a vacation comes at the cost of not experiencing the relaxation and fun associated with a vacation. All options have opportunity costs (getting married instead of staying single, investing in school instead of retirement, etc).
Everyone should know that opportunity cost is a very important concept that doesn’t just have its application in economics; you can apply it to all aspects of your daily life. Whether you’re cooking, eating, playing soccer, going to the movies, or hitting the gym, so long as you’re breathing, evaluating the choices you’re presented with is an inevitability, whether conscious of it or not.
Answer:
$74,400
Explanation:
Pell Company
Pell's income from Demers for the year ended December 31, 2010
Controlling Interest Share of Net Income for 2010- Excess Fair value Annual Amortization
Controlling Interest Share of Net Income for 2010= ($100,000 × .80) $80,000
Less Excess Fair Value Annual Amortization =($7,000 × .80) $5,600
Pell Income= $74,400
