A jewelry store promises to deliver custom-made wedding rings to a buyer within 2 weeks. However, it charges ten percent of the
sales price in advance. In this example, which of the following techniques is the store using to increase cash inflows? a.It is offering discounts to customers for prompt payment. b. It is taking deposits and progress payments. c. It is factoring all receivables d. It is taking on noncore paying projects
The correct answer is letter "B": It is taking deposits and progress payments.
Explanation:
Advance deposits and progress payments are the amount of money taken by an organization as part of the total amount charged for a good or service that is going to be provided. It is a form of endorsement that proves the buyer has a real intention in acquiring the good or service but also helps the organization to have immediate cash flow to pay for expenses such as the raw material that will be used for production (in the case of a good).
Based on the scenario being described within the question it can be said that Michael has most likely adopted the sales orientation. This term refers to a business approach that focuses on mainly persuading individual customers to purchase the company's product as opposed to understanding the customer's needs or marketing to a larger audience.
Accounting involves the process of taking accurate records of financial and non-financial activities of a business organization. Accounting is the language of business as it is needed for every business to succeed, also in accounting, records are kept that are useful in decision making.
