Tiny Toy Company makes toys and sells them to retail stores on account.The company has a December 31 year-end.In the past,Tiny Toy always sold on account but never offered sales discounts to its customers.However,this year on November 1,the beginning of the holiday sales season,Tiny Toy began offering stores terms of 2/90,n/120.The stores can return anything,no questions asked,but only after December 31.
Required:
A.Why would Tiny Toy offer such a liberal credit and return policy?
B.Put an X in the appropriate box to describe the effect of this credit and return policy on Tiny Toy's financial statements for this year.
C.Is Tiny Toy's new credit and return policy ethical?
Definitions:
Long-Lasting Attitudes
Persistent and stable evaluative beliefs held by an individual towards objects, people, or concepts over a prolonged period.
Reactance
A psychological response wherein an individual experiences a negative reaction to being restricted from certain behaviors or thoughts.
Bad Influence
A negative effect or impact, usually from one person to another, leading to undesirable behaviors or attitudes.
One-Sided Argument
A presentation of an argument that solely represents one perspective or aspect of an issue, often neglecting opposing viewpoints.
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