Shadow Services Uses the Accrual Method and Reports on a Calendar

question 124

Essay

Shadow Services uses the accrual method and reports on a calendar year. This year, Shadow agreed to a uniform-cleaning contract with Odie Cleaning. Under the contract, Odie bills Shadow for cleaning services as the services are provided. At year-end, Shadow paid Odie $2,350 for the services rendered during the year. In addition, Shadow paid Odie $700 for cleaning services expected in January of next year. What amount, if any, can Shadow deduct for the cleaning services this year?

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Definitions:

Proxy Statement

A document that a publicly traded company is required to send to its shareholders, containing information necessary to make informed decisions at shareholder meetings.

Preliminary Proxy Statements

Initial documents distributed to shareholders that outline matters to be voted on during a corporation's upcoming meeting.

SEC

Refers to the Securities and Exchange Commission, a U.S. federal agency responsible for enforcing federal securities laws and regulating the securities industry.

Registration Statement

A set of documents, including financial statements and a prospectus, filed with a regulatory body (like the SEC) to register a new issue of securities for sale to the public.