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Ethics in Action Netbooks Inc. provides accounting applications for business customers on the Internet for a monthly subscription. Netbooks customers run their accounting system on the Internet; thus, the business data and accounting software reside on the servers of Netbooks Inc. The senior management of Netbooks believes that once a customer begins to use Netbooks, it is very difficult to cancel the service. That is, customers are “locked in” because it is difficult to move the business data from Netbooks to another accounting application even though the customers own their own data. Therefore, Netbooks has decided to entice customers with an initial low monthly price that is half the normal monthly rate for the first year of services. After a year, the price will be increased to the regular monthly rate. Netbooks management believes that customers will have to accept the full price because customers will be “locked in’* after one year of use. a. Discuss whether the half-price offer is an ethical business practice. b. Discuss whether customer “lock-in” is an ethical business practice.

BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615
BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615

Solutions

Chapter
Section
Chapter 5, Problem 5.1CP
Textbook Problem

Ethics in Action

Netbooks Inc. provides accounting applications for business customers on the Internet for a monthly subscription. Netbooks customers run their accounting system on the Internet; thus, the business data and accounting software reside on the servers of Netbooks Inc. The senior management of Netbooks believes that once a customer begins to use Netbooks, it is very difficult to cancel the service. That is, customers are “locked in” because it is difficult to move the business data from Netbooks to another accounting application even though the customers own their own data. Therefore, Netbooks has decided to entice customers with an initial low monthly price that is half the normal monthly rate for the first year of services. After a year, the price will be increased to the regular monthly rate. Netbooks management believes that customers will have to accept the full price because customers will be “locked in’* after one year of use.

a.    Discuss whether the half-price offer is an ethical business practice.

b.    Discuss whether customer “lock-in” is an ethical business practice.

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Chapter 5 Solutions

Accounting (Text Only)
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Ch. 5 - Revenue journal The following revenue transactions...Ch. 5 - Revenue journal The following revenue transactions...Ch. 5 - Accounts receivable subsidiary ledger The debits...Ch. 5 - Accounts receivable subsidiary ledger The debits...Ch. 5 - Purchases journal The following purchase...Ch. 5 - Purchases journal The following purchase...Ch. 5 - Accounts payable subsidiary ledger The debits and...Ch. 5 - Accounts payable subsidiary ledger The debits and...Ch. 5 - Segment analysis McHale Company does business in...Ch. 5 - Segment analysis Back Country Life, Inc., does...Ch. 5 - Identify postings from revenue journal Using the...Ch. 5 - Accounts receivable ledger Based on the data...Ch. 5 - Identify journals Assuming the use of a two-column...Ch. 5 - Identify journals Assuming the use of a two-column...Ch. 5 - Identify transactions in accounts receivable...Ch. 5 - Prepare journal entries in a revenue journal...Ch. 5 - Posting a revenue journal The revenue journal for...Ch. 5 - Accounts receivable subsidiary ledger The revenue...Ch. 5 - Revenue and cash receipts journals Transactions...Ch. 5 - Revenue and cash receipts journals Lasting Summer...Ch. 5 - Identify postings from purchases journal Using the...Ch. 5 - Identify postings from cash payments journal Using...Ch. 5 - Identify transactions in accounts payable...Ch. 5 - Prepare journal entries in a purchases journal...Ch. 5 - Posting a purchases journal The purchases journal...Ch. 5 - Accounts payable subsidiary ledger The cash...Ch. 5 - Purchases and cash payments journals Transactions...Ch. 5 - Purchases and cash payments journals Happy Tails...Ch. 5 - Error in accounts payable subsidiary ledger After...Ch. 5 - Identify postings from special journals Pinnacle...Ch. 5 - Cash receipts journal The following cash receipts...Ch. 5 - Computerized accounting systems Most computerized...Ch. 5 - Computerized accounting systems and e-commerce...Ch. 5 - E-commerce For each of the following companies,...Ch. 5 - Segment revenue horizontal analysis Starbucks...Ch. 5 - Segment revenue vertical analysis News Corporation...Ch. 5 - Segment revenue horizontal and vertical analyses...Ch. 5 - Revenue journal; accounts receivable subsidiary...Ch. 5 - Revenue and cash receipts journals; accounts...Ch. 5 - Purchases, accounts payable subsidiary account,...Ch. 5 - Purchases and cash payments journals; accounts...Ch. 5 - All journals and general ledger; trial balance The...Ch. 5 - Problems: Series B Revenue journal; accounts...Ch. 5 - Revenue and cash receipts journals; accounts...Ch. 5 - Purchases, accounts payable account, and accounts...Ch. 5 - Purchases and cash payments journals; accounts...Ch. 5 - All journals and general ledger; trial balance The...Ch. 5 - Ethics in Action Netbooks Inc. provides accounting...Ch. 5 - Manual vs. computerized accounting systems The...Ch. 5 - Accounts receivable and accounts payable A...Ch. 5 - Design of accounting systems For the past few...Ch. 5 - Communication Internet-based accounting software...

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