You Own a Neighborhood Grocery Store and Would Like to Have

question 61

Multiple Choice

You own a neighborhood grocery store and would like to have non-food items delivered, priced, displayed and inventoried by a wholesaler. You do not want to purchase title to the goods. Which type of wholesaler best fits your needs?

• A) cash-and-carry wholesaler
• B) rack jobber
• C) drop shipper
• D) mail-order wholesaler
• E) agents and brokers

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Definitions:

Effective Income Tax Rate

This rate is the average percentage that companies or individuals pay in taxes on their taxable income.

U.S. Statutory Income Tax Rate

This refers to the prescribed rate at which income is taxed by the U.S. government, set by law for corporations and individuals.

Installment Method

A revenue recognition method allowing companies to recognize revenue and expense in proportion to the cash received from sales, typically used when sales are made with terms allowing payment over more than one year.

Percentage-of-completion Method

An accounting method that recognizes revenue and expenses related to long-term projects proportionally as the work is completed.