Customers are more valuable when they are all EXCEPT

ACCOUNTING

Multiple Choice

Customers are more valuable when they are all EXCEPT

a. well known in the community.

b. expected to continue to do business with a company.

c. in an industry with high-growth potential.

d. require special attention on a regular basis.

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Loss-causing customers

ACCOUNTING

Multiple Choice

Loss-causing customers

a. should be eliminated.

b. should be evaluated for ways to become profitable customers.

c. should be retained because each customer adds to long-run profitability.

d. do not exist because additional customer sales always increase profits.

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A common finding in many studies is that a high percentage of operating income is

ACCOUNTING

Multiple Choice

A common finding in many studies is that a high percentage of operating income is

a. contributed by a small number of customers.

b. contributed to evenly by most customers.

c. the result of high discounting.

d. the result of cooperative efforts by many low-volume customers.

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Corporate-sustaining costs should be allocated

ACCOUNTING

Multiple Choice

Corporate-sustaining costs should be allocated

a. to motivate changes in customer behavior.

b. to evaluate distribution-channel managers.

c. to determine the selling price that will cover all costs.

d. to identify the most profitable customers.

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When corporate-sustaining costs are fully allocated to distribution channels then the sum of the distribution-channel operating incomes

ACCOUNTING

Multiple Choice

When corporate-sustaining costs are fully allocated to distribution channels then the sum of the distribution-channel operating incomes

a. is less than company-wide operating income.

b. is equal to company-wide operating income.

c. is greater than company-wide operating income.

d. cannot be determined.

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If deciding whether to eliminate a distribution channel, allocating corporate-sustaining costs to distribution channels

ACCOUNTING

Multiple Choice

If deciding whether to eliminate a distribution channel, allocating corporate-sustaining costs to distribution channels

a. helps define cost reduction possibilities.

b. gives the misleading impression of potential cost savings.

c. identifies administrative inefficiencies.

d. evaluates the effectiveness of sales personnel.

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Donna's Entertainment is a merchandising business

ACCOUNTING

Foundations of Accounting I
Accounting Project
Written by: Karen Pitsch

Comprehensive Problem

Donna’s Entertainment is a merchandising business. Their account balances as of November 30, 2012 (unless otherwise indicated), are as follows:

110 Cash $ 73,920
112 Accounts Receivable 34,250
113 Allowance for Doubtful Accounts 11,000
115 Merchandise Inventory 123,900
116 Prepaid Insurance 3,750
117 Store Supplies 2,850

AND SO ON

During December, the last month of the accounting year, the following transactions were completed:

Dec. 1. Issued check number 2632 for the December rent, $2,600.
3. Purchased three TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $11,100.
4. Issued check number 2633 to pay the transportation changes on purchase of December 3, $400. (NOTE: Do not include shipping and purchase discounts to the Inventory Control sheet for this project.)
6. Sold four TV A and four TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.
10. Sold two projector systems for cash.

AND SO ON

Check Figures for Accounting Project:
Cash Receipts Journal; Cash Column: 97,939
Unadjusted Trial Balance Total: 1,080,620
Net Income: 264,350
Post Closing Trial Balance: 347,490

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