Assume You Are the Owner of a Video-Rental Store

question 25

Multiple Choice

Assume you are the owner of a video-rental store.Which of the following would be classified as a long-term decision?

• A)Purchase of children's video inventory.
• B)Purchase of cleaning supplies.
• C)Deciding whether to purchase a new building.
• D)Deciding whether to hire a new hourly employee for the summer.
• E)None of the above is a long-term decision.

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Definitions:

Merchandise Inventory

An asset and perpetual inventory system account that records purchases of merchandise. Discounts and returns are recorded in this account for the buyer.

Vouchers Payable

Represents liabilities or amounts owed by a company to its suppliers or vendors, documented through vouchers.

Periodic Method

A method of inventory accounting where updates to inventory levels and cost of goods sold are made at the end of an accounting period.

Gross Method

An accounting method where purchases are recorded at their full purchase price without deducting any cash discounts.