Author Question: What changes have taken place with respect to accounting rules related to sales promotions and why ... (Read 83 times)

jCorn1234

  • Hero Member
  • *****
  • Posts: 545
What changes have taken place with respect to accounting rules related to sales promotions and why are they significant?

Question 2

Samples are often used to infer something about a population rather than canvassing the population itself because they are typically
 a. cheaper than complete counts.
  b. faster than complete counts.
  c. more accurate than complete counts.
  d. Both a and b are correct.
  e. a, b, and c are correct.



nothere

  • Sr. Member
  • ****
  • Posts: 324
Answer to Question 1

Promotion expenditures historically were treated in exactly the same fashion as advertising expenditures, namely, as current expenses that were deducted from top-line revenue. However, new accounting rules require that those sales promotions used as a form of price discount, including promotions directed to retailers as well as to consumers, must now be treated as reductions in sales revenue. The difference between the old and new procedures is the amount recorded for the top-line revenue, and this change better reflects true levels of sales revenue. The old accounting system served to inflate actual revenue and to mislead financial analysts, stockholders, and other parties regarding a firm's actual revenue generation. Moreover, sales forces compensated on the basis of top-line results were overcompensated because revenue itself was overstated.

Answer to Question 2

e



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

Pink eye is a term that refers to conjunctivitis, which is inflammation of the thin, clear membrane (conjunctiva) over the white part of the eye (sclera). It may be triggered by a virus, bacteria, or foreign body in the eye. Antibiotic eye drops alleviate bacterial conjunctivitis, and antihistamine allergy pills or eye drops help control allergic conjunctivitis symptoms.

Did you know?

Cytomegalovirus affects nearly the same amount of newborns every year as Down syndrome.

Did you know?

Approximately one in four people diagnosed with diabetes will develop foot problems. Of these, about one-third will require lower extremity amputation.

Did you know?

Inotropic therapy does not have a role in the treatment of most heart failure patients. These drugs can make patients feel and function better but usually do not lengthen the predicted length of their lives.

Did you know?

Adults are resistant to the bacterium that causes Botulism. These bacteria thrive in honey – therefore, honey should never be given to infants since their immune systems are not yet resistant.

For a complete list of videos, visit our video library