Tammy is talented at craft but lacks the cash flow management skills required to run a business.She opens a store,Tammy's Craft Corner,with the help of her son David-a business major-who manages the budgets and expenses of the business.Tammy receives a bulk order from a customer to make 100 paper roses for Valentine's Day.She charges 20 percent of the total sales price in advance and promises to deliver the order within 30 days. The advance payment that Tammy receives for the order before delivering the product is called _____.

Question

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The advance payment that Tammy receives is called a deposit and progress payment. It is a partial payment made before the completion of the order and is often used as a way to ensure the customer's commitment to the order and to cover some initial expenses. The 20 percent of the total sales price that Tammy charges is a common amount for a deposit and progress payment.

Tammy Is Talented at Craft but Lacks the Cash Flow