Which of the Following Statements Does Not Describe a Benefit

question 4

Multiple Choice

Which of the following statements does not describe a benefit of markdowns for a retailer?

• A) Markdowns generate cash flow to pay for new merchandise.
• B) It is a way to make room for new merchandise.
• C) It rids the store of obsolete merchandise.
• D) It increases customer traffic.
• E) It is a way to gain a higher gross margin.

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Definitions:

Controlling Account

An account in the general ledger that summarizes the total amounts recorded in all subsidiary ledger accounts.

Subsidiary Ledger

A ledger containing the details of transactions for a specific account, which then summarizes into a single amount in the general ledger.

Alphabetical Order

A system of arranging items according to the sequence of the letters in the alphabet.

Financial Statement

A written record that conveys the business activities and the financial performance of a company, usually consisting of the balance sheet, income statement, and cash flow statement.