"Depending Upon the Circumstances,a Promise to Pay a Specific Sum

question 8

Essay

"Depending upon the circumstances,a promise to pay a specific sum of money may or may not be enforceable if that promise is given in response to services that have already been received." Explain whether or not that statement is accurate.

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Definitions:

Future Cash Flows

The projected cash receipts and payments a business expects over a period in the future, important for investment and valuation purposes.

Net Income

Profit of a company after all expenses and taxes have been subtracted from total revenue.

Matching Principle

An accounting principle that dictates that expenses should be recognized in the period in which the related revenues are earned, helping to ensure that financial statements are accurate.

Expenses

The outflows or using up of assets as part of operations of a business to generate revenue.