The decisions and actions below were undertaken by the management of Banerjee Shoe Company.

LO 1 Management Issues and Decisions Indicate whether each action pertains primarily to

(a) cash flow management,

(b) profitability management,

(c) choice of inventory systems, or

(d) control of trading operations.

1. Decided to place on each item of inventory a magnetic tag that sets off an alarm if the tag is removed from the store before being deactivated.

2. Decided to reduce the credit terms offered to customers from thirty days to twenty days in order to speed up collection of accounts.

3. Decided that the benefits of keeping track of each item of inventory as it is bought and sold would exceed the costs of such a system and acted to implement the decision.

4. Decided to raise the price of each item of inventory to achieve a higher gross profit to offset an increase in rent expense.

5. Decided to purchase a new type of cash register that can be operated only by a person who knows a predetermined code.

6. Decided to switch to a new cleaning service that will provide the same service at a lower cost.