Some Transactions Can Qualify as Either Business Entertainment or as a Business

question 15

Essay

Some transactions can qualify as either business entertainment or as a business gift.In such cases,the business entertainment classification usually predominates.However,in one situation a choice between the two is allowed.Explain.

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Definitions:

Top-Down Approach

A decision-making process that starts at the highest level of an organization and cascades down to lower levels; also, a method of analysis that begins with a macro overview before drilling down into specifics.

Operating Cash Flow

The cash generated by a company's normal business operations, indicating whether a company is able to generate sufficient positive cash flow to maintain and grow its operations.

Cash Expenses

These are expenses that require an immediate outlay of cash by the business.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, a fundamental concept in economics and financial decision-making.