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:

Time Constraint

A limitation or restriction on the period within which something can be achieved.

Microeconomics

The branch of economics that focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders.

Free Time

Periods when an individual is not engaged in work and can choose leisure or other personal activities.

Laspeyres Price Index

A measure of price inflation or deflation for a specified set of goods and services, using the quantities of the base year as weights.