A major manufacturer of automobile tires sells its products at its dealership retail stores. After a tire is sold, the customer can return to any manufacturers' retail store and the tire can be rotated on the car at no expense to the customer
Should a repair to the tire be needed, the customer will receive a discount from the list price bill as a form of a warranty received at the time of purchase of the tire. Identify and explain the selling approach being implemented by this manufacturer.
Relationship selling is being implemented by the manufacturer at its dealership retail stores. The free rotation of the tire and the discount pricing if a repair is needed are means of developing a long-time relationship with customers who will likely return to this manufacturer the next time they need to buy tires.
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Which of the following statements pertaining to life insurance premiums is NOT correct?
A) The interest factor is a premium charge based on assumed lost earnings after claims. B) An insurance company invests the premium money it collects to earn interest. C) The expense factor in premium ratemaking frequently is referred to as loading. D) For an insurance company, the costs of doing business must be reflected in its premiums."
On January 1, 2009, Ryan Company paid the premium in advance on a three-year insurance policy on equipment in the amount of $6,000. At that time, the full amount paid was recorded as prepaid insurance. On December 31, 2009, the end of the accounting year, Hammond Company would be required to record an adjusting entry that would include a:
a. $6,000 credit to prepaid insurance b. $2,000 debit to insurance expense c. $2,000 debit to prepaid insurance d. $6,000 debit to insurance expense