In Recent Years, the Distinctions Between Discount, Premium Discount, and Full-Service

question 21

Multiple Choice

In recent years, the distinctions between discount, premium discount, and full-service brokers

• A) have been regulated into law.
• B) have become increasingly well defined.
• C) have been somewhat blurred.
• D) mainly concern whether or not the brokerage offers online trading.

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Definitions:

Net Method

A way of recording purchases or sales of goods that directly factors in any discounts or allowances at the time of the transaction.

Gross Method

An accounting method for recording purchases at the full invoice price without deducting any cash discounts offered.

Cash Discounts

A reduction in the amount owed by a customer if payment is made within a specified time frame.

Period-End Adjusting Entry

An accounting record made at the end of an accounting period to allocate income and expenditures to the appropriate period.