How Should a Rent a Car Company and the Local

question 17

Multiple Choice

How should a Rent A Car company and the local phone utility report the sales revenue from auctioning their used vehicles after these have fulfilled their strategically defined useful life?

• A) Both the rental car company and the utility company report the revenue as 'exceptional revenue'.
• B) Both the rental car company and the utility company report the revenue as 'revenue from operations'.
• C) The rental car company reports this revenue as 'operating revenue' while the utility company reports the equivalent sale as 'exceptional revenue'.
• D) The rental car company reports this revenue as 'exceptional revenue' while the utility company reports the equivalent sale as 'operational revenue'.

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Definitions:

Inventory Costs

Expenses associated with managing and holding inventory, including storage, insurance, taxes, and potential obsolescence.

Total Inventory

The total amount of goods and materials held in stock by a business at a given time, including raw materials, work-in-progress, and finished goods.

Cash Discounts

A reduction in invoice price offered by sellers to buyers as an incentive for early payment.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including payment due dates, interest rates, and repayment schedules.