All of the Following Are True About a Service Charge

question 29

Multiple Choice

All of the following are true about a service charge, EXCEPT

• A) it is a predetermined amount added to the customer's check.
• B) it is considered a tip.
• C) it is considered part of the restaurant's gross revenue.
• D) restaurants pay income tax on it.

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Definitions:

Current Assets

Current assets are all assets that a company expects to convert to cash or use up within one year.

Current Liabilities

Current liabilities are a company's liabilities that are due within one fiscal year or the operating cycle, whichever is longer, and include debts such as accounts payable and short-term loans.

Sales Taxes

Taxes imposed by governments on the sale of goods and services, usually calculated as a percentage of the sale price.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.