A Firm Has Just Ended Its Calendar Year Making a Sale

question 96

Multiple Choice

A firm has just ended its calendar year making a sale in the amount of $150,000 of merchandise purchased during the year at a total cost of $112,500. Although the firm paid in full for the merchandise during the year, it has yet to collect at year end from the customer. The net profit and cash flow from this sale for the year are

• A) $0 and $150,000, respectively.
• B) $37,500 and -$150,000, respectively.
• C) $37,500 and -$112,500, respectively.
• D) $150,000 and $112,500, respectively.

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Definitions:

Straight Commission

A compensation structure where employees are paid solely based on the sales they generate, with no fixed salary.

Free Rider Effect

A phenomenon where some individuals benefit from resources or services without contributing to the cost, often seen in team or group settings.

Team Incentives

Reward systems designed to motivate team performance by offering benefits or compensation based on achieving collective goals or benchmarks.

Piece Rates

A payment method where workers are paid a fixed rate for each unit of production completed, encouraging productivity and efficiency.