Davis Owns and Operates a Convenience Store on the North

question 38

Multiple Choice

Davis owns and operates a convenience store on the north side of the city. He has always wanted to operate a sports bar. When he hears of a new shopping center development in the south part of the city, he contacts the developer and begins negotiations to open his dream enterprise. If negotiations are successful and Davis incurs $40,000 in start-up costs to open his new I. business, he can deduct up to $5,000 of the start-up costs and must capitalize the costs of investigation and start-up exceeding $5,000. II. If Davis decides not to open his bar and restaurant, the investigation expenses are fully deductible.

• A) Only statement I is correct.
• B) Only statement II is correct.
• C) Both statements are correct.
• D) Neither statement is correct.

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Definitions:

Target Market

A specific group of potential customers at whom a company aims its products and services.

Post-it Flag Highlighter

A stationery tool that combines the features of a highlighter and removable page markers for annotating and marking important information in documents.

Product Line

A group of related products marketed by the same company that function in a similar manner, are sold to the same customer groups, and marketed through the same types of outlets.

Marketing Concept

A business philosophy suggesting that to achieve organizational goals, a company must anticipate and satisfy customers' needs and wants better than its competitors.