A Store Is Deciding Whether to Advertise a Credit Card

question 79

Multiple Choice

A store is deciding whether to advertise a credit card fee or a discount for customers paying with cash. Which advertisement will make customers more likely to pay with cash?

• A)The credit card fee
• B)The discount for paying cash
• C)Either one; since it's the same outcome, customers won't care one way or another.
• D)Neither one; customers are not likely to pay with cash regardless of how it's advertised.

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold before accounting for other expenses.

Perpetual Inventory System

An accounting method that records inventory purchases or sales in real-time through the use of computerized point-of-sale systems and enterprise asset management software.

Cost of Merchandise Sold

The total cost incurred by a company to sell goods during a specific period, including purchase and direct labor costs.

Merchandising Business

A type of business that purchases goods wholesale and resells them retail; primarily involved in selling merchandise to consumers.