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Scenario: Company A and Company B are considering spending a certain sum of money to advertise their new range of products. If Company A chooses to advertise while Company B does not, Company A's annual sales will increase by $5 million, while Company B's sales will remain unchanged. If Company B chooses to advertise while Company A does not, Company B's annual sales will increase by $5 million, while Company A will not experience any change in its sales. If both the companies decide to advertise, their sales will increase sales by $2 million each, and if neither of them spends on advertisement, their sales will remain unchanged.
-Refer to the scenario above.Suppose the cost of advertising in this industry is very high and each company will incur a cost of $3 million annually if they choose to advertise.Which of the following is true in this case?
Service Revenue
Income earned by a company for performing a service rather than selling physical goods.
Salaries and Wages Expense
The total amount paid to employees for services rendered during a specific period; considered an operating expense.
Unearned Subscription Revenue
Income received from subscriptions before the service has been fully delivered or the term of the subscription has been fulfilled.
Liability
Financial obligations or debts that an entity owes to another party, which need to be settled over time through the transfer of economic benefits including money, goods, or services.
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