Response to the following questions:
1. To match revenues and expenses properly, should the expense for employee vacation pay be recorded in the period during which the vacation privilege is earned or during the period in which the vacation is taken? Discuss.
2. What key characteristics define an annuity? What is the present value of a $500, three-year annuity, where the first payment is received one year from today and the relevant interest rate is 8%? Use the present value tables.