The Rule Of 78s: Practical Applications And Theoretical Limitations

Main Article Content

George R. McGrail

Keywords

Rule of 78's, recording income and expense, accountant

Abstract

The purpose of this article is to provide an in-depth explication of basic concepts and operational precepts of the rule of seventy-eights sol that the accountant may better understand and, therefore, better advise his client in regard to interest income recognition. This income recognition technique does have wide application and as will be shown, is a theoretically valid approach to recording interest revenue so long as certain constraints are not violated.

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