Figure 7-8.
Sallisaw Savings & Loan has requested an analysis of checking account profitability by customer type.Customers are categorized according to size of their account: low balances,medium balances,and high balances.The activities associated with the three different customer categories and their associated annual costs are as follows:
Additional data concerning the usage of the activities by the various customers are also provided:
Refer to Figure 7-8.
Definitions:
Prepaid Rent
Payments made in advance for rent, recorded as an asset on the balance sheet until it is consumed over time and moved to expense.
Prepaid Expenses
Payments made in advance for goods or services, which are recorded as an asset until they are consumed or used.
Accrued Revenues
Income earned but not yet received, representing goods or services that have been delivered but payment has not been collected.
Unearned Revenues
Money received by a company for goods or services yet to be delivered or performed, considered as a liability until earned.
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