Tyrone Is Attempting to Measure the Long-Term Value or Profitability

question 48

Multiple Choice

Tyrone is attempting to measure the long-term value or profitability of his customers. Tyrone is measuring:

• A) Sales per customer per quarter
• B) Current operating profit minus direct costs
• C) Gross revenue minus net revenue
• D) Lifetime value of the customer
• E) Relationship revenue minus overhead costs

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Definitions:

Net Sales

The financial income a business earns from sales activities, minus the deductions for returns, damaged or lost items allowances, and discounts.

Gross Profit

The financial gain obtained after deducting the cost of goods sold from total sales revenue.

Income from Operations

The profit realized from a business's ongoing operations, calculating the difference between revenues from operations and operational expenses.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to update the balances of accounts.