TABLE 3-6 The Rates of Return of an Internet Service Provider Over

question 45

Short Answer

TABLE 3-6
The rates of return of an Internet Service Provider over a 10 year period are: 10.25%, 12.64%, 8.37%, 9.29%, 6.23%, 42.53%, 29.23%, 15.25%, 21.52%, -2.35%.
-Referring to Table 3-6, compute the geometric mean rate of return per year for the first three years.

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Definitions:

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash transaction happens.

Revenue Recognition

The accounting principle that dictates the specific conditions under which income becomes realized as revenue.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Prepayments

Payments made in advance for goods or services, which are recorded as assets on the balance sheet until the corresponding goods or services are received.