All of the Alternatives Listed Below Are Ways to Safeguard

question 95

Multiple Choice

All of the alternatives listed below are ways to safeguard against inflation EXCEPT:

• A) modify components, ingredients, parts and/or packaging materials.
• B) source materials from low-cost suppliers.
• C) lengthen credit terms.
• D) include escalator clauses in long-term contracts.
• E) quote prices in a stable currency.

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Definitions:

Income Summary

An account used in the closing process that summarizes the results of operations by collecting all revenue and expense account balances before determining the net income or loss.

Retained Earnings

The cumulative amount of profits that have been reinvested in the business rather than distributed to shareholders as dividends.

Dividends

Dividends disbursed to members holding shares in a corporation, generally originating from the profits of the business.

Salary Expense Accrual

An accounting practice of recognizing salary expenses incurred in a period that has not yet been paid out in order to accurately reflect the company's liabilities.