Which One of the Following Is a Problem Resulting from a Service

question 90

Multiple Choice

Which one of the following is a problem resulting from a service company being overstaffed?

• A) Labor costs will be disproportionately low.
• B) Profits will be higher because of the additional salaries.
• C) Staff turnover may increase.
• D) Revenue may be lost.

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Definitions:

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as one single economic entity.

Subsidiaries

Companies that are controlled by another company, often referred to as the parent company, through ownership of over 50% of the subsidiary's voting stock.

Goodwill Impairment

A decrease in the value of goodwill on a company's balance sheet, indicating that the expected future cash flows from an acquisition are lower than initially estimated.

Straight-Line Method

A method of calculating the depreciation of an asset, which spreads the cost evenly over its useful life.