movie theater tickets or a gym membership are both discretionary expenses.discretionary expenses can best be described as something that is a luxury
Answer:
A. Adjusting Journal Entries:
Dec. 31, 2019:
Debit Accounts Receivable $22,650
Credit Service Fee Revenue $22,650
To record fees earned, but not yet billed to clients.
B. No. If the cash basis rather than the accrual basis had been used, an adjusting entry would not have been necessary.
Explanation:
Adjusting entries are only required to align the cash-basis accounting records to the accrual basis. Adjustments are made for prepayments of expenses, unpaid expenses, deferred revenue, unearned earned and earned revenue, and depreciation charges. For an entity operating on a cash basis, adjusting entries are not required.
Adjusting entries ensure that accounting records comply with the accrual concept and matching principle of generally accepted account practises. The requirement under this concept with the matching principle is to accrue and match expenses and revenue to the related revenue and expenses and period.
Answer:
Year Costs % Total cost Revenue Income
incurred excepted costs recognized
$'million $'million $'million $'million
2016 336 40% 420 84
2017 504 60% 630 126
Total 840 100% 1,050 210
<u>Workings</u>
1. % Total cost excepted costs
2016 = 336 / 840 = 0.4 = 40%
2017 = 504/840 = 0.6 = 60%
2. Revenue recognized
2016 = 1,050 * 40% = 420
2017 = 1,050 * 60% = 630
3. Income = Revenue recognized - Cost incurred
The present value of an expected future payment "<em><u>falls</u></em>" as the interest rate increases.
This is based on the idea that the bond is paid at a fixed interest rate. Thus as the interest rate increases, the value of the bond decreases or falls because investors would certainly stay away from such bonds, therefore, making its value reduce or fall.
Similarly, if the interest falls, a bond with a fixed interest rate becomes more attractive to investors.
Hence, in this case, it is concluded that the interest rates determine the value of the bond.
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