ExplodiaCom Sells Fireworks Over the Internet

question 246

Multiple Choice

Explodia.com sells fireworks over the Internet. Customers access Explodia's website and select particular products, and Explodia refers the customer order to a fireworks manufacturer who fulfills the order, ships to the customer, and pays Explodia a 20% commission. Which of the following is true about Explodia?

• A) Explodia is an agent in this transaction.
• B) Explodia is primarily responsible for providing the product to the customer.
• C) Explodia's income statement would report gross revenue and cost of sales associated with these transactions.
• D) Explodia warehouses inventory.

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Definitions:

Financial Statements

Documents that provide an overview of a company's financial condition, including balance sheets, income statements, and cash flow statements.

Available Cash

The funds that a company or individual has on hand that are readily accessible for use or investment.

External Causes

Factors outside of an individual's or organization's control that can impact outcomes or performance.

Company Management

The process of directing and controlling a business or organization through the making and implementation of decisions.