The Major Problem with the Sales-Productivity Ratio Method of Assigning

question 25

Multiple Choice

The major problem with the sales-productivity ratio method of assigning space is that _____.

• A)storability may not be considered
• B)too much space may be assigned for merchandise space
• C)too little space may be assigned for merchandise space
• D)an inadequate selection of merchandise may be stocked

---

Definitions:

Gain on Sale

The financial profit earned from selling an asset at a higher price than its purchase price or book value.

Equity Method

A method of accounting that allows an investor to recognize gains and losses through their share of an associate's profits or losses, adjusting the value of their investment accordingly.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) for global use.

Entity Theory

A concept in accounting that treats a business as separate from its owners or other businesses, supporting the preparation of separate financial statements.