Question

After double checking the just completed repairs Harvey has second thoughts and when he sees the owner of Silver Service in the parking lot on his way out he stops her and hands her a $20 tip for a job well done You decide: i. What was the total income for each of this case? ii. How do you know?

a. Case 1 Phil is trying to analyze his income and expenses for the past week. He comes across an invoice from the local part store for a water pump for a 2001 Volvo. He knows that he needed that water pump and used it to fix Mr. Jones' car last Tuesday. He's sure he charged Mr. Jones for the water pump when he picked up his car Thursday night You decide: i. Is the water pump a direct expense? ii. How do you know?

b. Case 2 In the process of replacing the water pump on Mr. Jones' Volvo he found that he had run out of gasket sealant. Fortunately he caught this in time and had the parts store send him a can of sealant along with the water pump he had ordered You decide: i. Is the gasket sealant a direct expense?

Answer 1

i. What was the total income for each of this case?

We are not given enough information about the original invoice or payment amount to determine Harvey's total income.

ii. How do you know?

We do not have any details about the original bill or payment to calculate Harvey's total income. All we know is that Harvey later decided to give the shop owner a $20 tip.

Case 1:

i. Is the water pump a direct expense?

Yes, the water pump is a direct expense.

ii. How do you know?

Direct expenses are costs that can be traced directly to a specific job or activity. Since Phil knows he needed and used the specific water pump to fix Mr. Jones' car, it is a direct expense for that repair job.

Case 2:

i. Is the gasket sealant a direct expense?

Yes, the gasket sealant is a direct expense.

ii. How do you know?

Like the water pump, Phil knows he specifically needed and used the gasket sealant to replace the water pump on Mr. Jones' Volvo. Therefore, the sealant is a direct expense for that repair job.