Accounting for Costs of Incentive Programs for Frequent Customer Purchases

question 10

Multiple Choice

Accounting for costs of incentive programs for frequent customer purchases involves:

• A)Recording an expense and a liability each period.
• B)Recording a liability and a reduction of revenue each period.
• C)Recording an expense and an asset reduction each period.
• D)Recording an expense and revenue each period.

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Definitions:

Equilibrium Value

The point at which the quantity of a good or service demanded equals the quantity supplied, resulting in market stability.

Opportunity Cost

Whatever must be given up to obtain some item.

Holding Currency

The practice of keeping money in the form of cash or liquid assets as opposed to investing or depositing it.

MPC

Marginal Propensity to Consume refers to the proportion of an increase in income that gets spent on consumption of goods and services, as opposed to being saved.