A Local Grocer Wanted to Cut Down on the Use

question 42

Multiple Choice

A local grocer wanted to cut down on the use of credit cards in his store. He found his business declined significantly when he imposed a "surcharge" for credit card sales. However, his business boomed when he offered "rebates" for cash sales, even though customers paid the same amount for products in both cases. This situation illustrates the impact of

• A) phonemic overextension.
• B) semantic slanting.
• C) the alternative outcomes effect.
• D) the conjunction fallacy.

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Definitions:

Direct Write-Off Method

A method of accounting for bad debts that writes off an outstanding account receivable as a bad debt expense only when it becomes evident the debt is uncollectible.

Reinstatement

The process of restoring a previous condition or position, such as reinstating a lapsed insurance policy or an employee's job position.

Receipt of Cash

The process of receiving cash as a form of payment, often recorded during accounting transactions.

Accounts Receivable Turnover

A financial metric that measures how efficiently a company collects revenue from its credit customers, calculated as sales divided by the average accounts receivable.