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Scenario 4-5 Jay and Carrie Garrett Operate a Small Retail Store in Store

question 17

Multiple Choice

Scenario 4-5
Jay and Carrie Garrett operate a small retail store in a college town that sells only house plants and accessories called The Plantatarium. Their initial feeling when they went into business was that virtually everyone was a potential customer for house plants. Subsequent market research conducted for them painted a different picture. This research identified three particularly strong market segments. The first was college students ages 18-24. The next segment was retired seniors ages 65-80. The third segment was professional offices for doctors, accountants, and lawyers. The college students liked houseplants because they dressed up their living spaces. The senior liked them because they became the focus of a hobby. The professionals did not buy them for any other reason than décor.
-(Scenario 4-5) The owners of this business have decided to carry a great deal of plants that flower throughout the year because most consumers have said they like them for the cheerful feeling they give. This suggests that The Plantatarium is following a ____ strategy.

Definitions:

Adjusting Journal Entry

A type of journal entry made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Accrual

The accounting practice that documents income and expenditures at the time they happen, irrespective of the timing of the actual cash flows.

Retained Earnings

The amount of net profit remaining for the company after distributing dividends to its stockholders.

Note Payable

A written promise to pay a specified amount of money, along with interest, by a certain date.