You Are Leaning Towards Implementing a Salary Plus Commission Plan

question 14

Multiple Choice

You are leaning towards implementing a salary plus commission plan for your sales force. You recognize that this plan is popular because it provides:

• A) fixed income security.
• B) incentive to increase sales.
• C) both fixed income security and incentive to increase sales.
• D) stock options in all cases.
• E) none of the above.

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Definitions:

Stockholders' Equity

Shareholders' Equity reflects the stake of owners in a company, determined by subtracting the firm's total liabilities from its total assets.

Expense

Outflows or other using up of assets or incurrence of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Liability

A company's legal financial debts or obligations that arise during the course of business operations.

Revenue

The total income generated by a company from its business activities, including sales of goods or services before any expenses are deducted.