A Limitation of the Straight-Commission Method of Paying a Sales

question 38

Multiple Choice

A limitation of the straight-commission method of paying a sales force is that this method usually:

• A)Means that compensation expenses are a fixed cost.
• B)Does not provide incentive for the sales representatives.
• C)Attracts a poor caliber of sales representatives.
• D)Makes it difficult to supervise and direct the activities of salespeople.
• E)Discourages the sales representative from working long hours.

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Definitions:

Current Asset

Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.

Temporary Accounts

Accounts used to collect information during a single accounting period, which are reset by transferring the balance to a permanent account at the period's end.

Prepaid Expenses

Items such as supplies that will be used in the business in the future.

Current Assets

Assets that a company expects to convert into cash, sell, or consume within one year or during its operating cycle, whichever is longer.