Although Maximizing Route Size Was a Way to Grow Business

question 435

Multiple Choice

Although maximizing route size was a way to grow business and make more money, why was this not a preferred strategy for many Mexican gardeners working in Los Angeles?

• A) They lack the entrepreneurial, business, and accounting skills to manage a large number of employees and customers.
• B) Since this is a business that mostly paid in cash, they had no way of keeping track of the money coming in, once their routes became too large.
• C) Over time, gardeners found that customers were getting cheaper in how much they would pay and their employees were becoming less reliable, making it more difficult to run a profitable business.
• D) Gardening is hard work and these men found that if their businesses grew too much they could not handle the physical toll it took on their bodies.

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Definitions:

Acquisition Differential

The difference between the acquisition cost of an entity and the fair value of its net identifiable assets at the time of acquisition.

Land Account

An account on a company's balance sheet that represents the cost of land owned by the company without any depreciation applied, since land is considered to have an unlimited useful life.

Investment Account

An account held at a financial institution for the purpose of managing securities, such as stocks and bonds, for investment purposes.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted over time for the investor's share of the investee's net profits or losses.