When the Materials and Supplies Are Received and the Invoice

question 6

Multiple Choice

When the materials and supplies are received and the invoice is more than the related purchase order, this entry should be made:

• A) Debit Expenditures Control for the amount of the invoice.
• B) Debit Expenditures Control for the amount of the purchase order.
• C) Credit Accounts Payable for the amount of the purchase order.
• D) Credit Encumbrances Control for the amount of the invoice.

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Definitions:

Present Value

The monetary valuation presently of a future sum of money or ongoing cash flows, considering a predetermined rate of return.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, typically on an annual basis.

Discount Rate

Within DCF analysis, it's the rate employed to compute the present economic value of expected future cash inflows.

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specific interest rate.