Entrepreneurial Finance 6th edition by Adelman

Marks ISBN 0133140512 9780133140514

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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1)
Working
capital
consists
of the
total
assets
and total
liabilities
of a
company
.
1)
_______

2)
Working
capital
consists
of the
current
assets
and
current
liabilities
of a
company
.
2)
_______

3)
Net
working
capital is
the
differenc
e
between
total
current
assets
and total
current
liabilities
.
3)
_______

4)
The
current
ratio is
current
liabilities
divided
by
current
assets.
4)
_______

5)
The
current
ratio is
current
assets
divided
by
current
liabilities
.
5)
_______

6)
The
disburse
ment
float is
the
amount
of time
that
elapses
between
depositin
g the
debtor's
check in
an
account
and the
check
clearing
the
account.
6)
_______

7)
The
collectio
n float is
the
amount
of time
that
elapses
between
depositin
g the
debtor's
check in
an
account
and the
check
clearing
an
account.
7)
_______

8)
Factoring
is the
process
of
putting
up
accounts
receivabl
e as
collateral
to obtain
cash.
8)
_______

9)
Pledging
is the
process
of
putting
up
accounts
receivabl
e as
collateral
to obtain
cash.
9)
_______

10)
The three
Cs of
credit are
character
,
capacity,
and
comedy.
10)
______

11)
The three
Cs of
credit are
character
,
capacity,
and
collateral
.
11)
______

12)
If credit
sales
remain
the same
and
accounts
receivabl
e
decrease,
accounts
receivabl
e
turnover
will
increase.
12)
______

13)
If credit
sales
remain
the same
and
accounts
receivabl
e
increase,
accounts
receivabl
e
turnover
will
increase.
13)
______

14)
The
economi
c order
quantity
formula
balances
the cost
of
ordering
an item
against
the cost
of
storing
an item.
14)
______

15)
Total
ordering
cost and
total
carrying
cost are
never
equal at
the EOQ.
15)
______

16)
Work in
process
inventor
y is
made up
of those
items
that are
actually
sold by
the
business.
16)
______

17)
Raw
materials
inventor
y is
made up
of those
items
that are
actually
sold by
the
business.
17)
______

18)
Finished
goods
inventor
y is
made up
of those
items
that are
actually
sold by
the
business.
18)
______

19)
When
using an
ABC
inventor
y, A
items are
those 75
percent
of the
items
that
make up
5 to 10
percent
of the
total
cost.
19)
______

20)
Short-
term
debt
manage
ment
consists
of
obligatio
ns that
will be
paid
within
the
current
accounti
ng
period.
20)
______

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
21)
Which of
the
followin
g would
NOT be
counted
as part of
working
capital?
21)
______
A)
accounts receivable
B)
inventory
C)
cash
D)
accounts payable
E)
equipment

22)
All of the
followin
g are
part of
working
capital
EXCEPT
22)
______
A)
mortgage.
B)
cash.
C)
inventory.
D)
accounts receivable.
E)
none of the above.

23)
Net
working
capital
can be
found by
subtracti
ng
23)
______
A)
total liabilities from total assets.
B)
current assets from current liabilities.
C)
current liabilities from current assets.
D)
current assets from total liabilities.
E)
current liabilities from total assets.

24)
All of the
followin
g
accounts
are part
of cash
manage
ment
EXCEPT
24)
______
A)
cash invested in a stock mutual fund.
B)
cash on hand.
C)
cash in a checking account.
D)
petty cash.
E)
cash in a savings account.

25)
Which of
the
followin
g is true
about
disburse
ment
float?
25)
______
A)
Funds are collected and debited to an account.
B)
Funds are removed from the checking account immediately when the check is written.
C)
Funds are collected and credited to an account.
D)
Funds are deposited to a checking account immediately when a check is written.
E)
None of the above.

26)
Which of
the
followin
g is true
about
disburse
ment
float?
26)
______
A)
Funds are collected and debited to an account.
B)
Funds are deposited to a checking account immediately when a check is written.
C)
Funds are collected and credited to an account.
D)
Funds are the checking account immediately when the check clears the checking account.
removed from
E)
None of the above.

27)
Collectio
n float is
the
amount
of time
that
elapses
between
________
a check
in an
account
and the
check's
________
, at
which
point the
funds are
actually
placed in
the
account.
27)
______
A)
depositing; clearing
B)
issuing; clearing
C)
writing; being deposited
D)
receiving; being deposited
E)
A and B above

28)
Which of
the
followin
g is a
method
used to
speed up
cash
receipts?
28)
______
A)
lock box
B)
electronic funds transfer
C)
writing a check
D)
A and B above
E)
B and C above

29)
Marketa
ble
securities
29)
______
A)
never offer any risk.
B)
normally pay a higher rate of interest than checking accounts.
C)
consist of government securities only.
D)
never require an investment strategy.

30)
The goal
of
accounts
receivabl
e
manage
ment is
to
30)
______
A)
have a department of its own in a company.
B)
give credit to every customer.
C)
increase sales by offering credit to customers.
D)
collect money as fast as possible.

31)
Factoring
is the
process
of selling
accounts
receivabl
e to
another
firm at
31)
______
A)
a premium
above the
original sales
price.
B)
a price equal to the sales price.
C)
a discount off
of the original
sales price.
D)
the prime lending rate.

32)
The
practice
of selling
a firm's
accounts
receivabl
e to
another
firm at a
discount
is known
as
32)
______
A)
excising.
B)
crediting.
C)
exporting.
D)
factoring.

33)
The
credit
decision
involves
33)
______
A)
looking at the borrower's collateral.
B)
granting credit to all applicants.
C)
making sure that the customer is a good credit risk.
D)
investigating the customer.
E)
all of the above.

34)
Credit
departm
ents are
normally
found in
34)
______
A)
most retail firms.
B)
most manufacturing firms.
C)
most wholesale firms.
D)
A and B above.
E)
B and C above.

35)
Prior to
making a
credit
decision
we
should
always
check the
applicant
's
35)
______
A)
character,
capacity, and
collateral.
B)
collateral, credit, and cash.
C)
collateral,
character, and
current assets.
D)
capacity, cash, and collateral.

36)
When
evaluatin
g credit,
a
customer
who has
paid all
bills on
time and
has
favorable
credit
reference
s from
other
creditors
is said to
have
36)
______
A)
capacity.
B)
collateral.
C)
creditworthine
ss.
D)
character.

37)
When
evaluatin
g credit,
a
customer
who has
sufficient
disposab
le
income
and cash
flow to
pay off a
loan is
said to
have
37)
______
A)
collateral.
B)
creditworthine ss.
C)
character.
D)
capacity.

38)
When
evaluatin
g credit,
a
customer
who
could
sell
assets to
pay off a
loan is
said to
have
38)
______
A)
creditworthine
ss.
B)
character.
C)
collateral.
D)
capacity.

39)
If a firm
has
$400,000
in credit
sales and
$80,000
in
average
accounts
receivabl
e,
accounts
receivabl
e
turnover
is
39)
______
A)
32.
B)
48.
C)
0.20.
D)
5.

40)
If a firm
has
$400,000
in credit
sales and
$80,000
in
average
accounts
receivabl
e,
average
days
collectio
ns is
approxi
mately
40)
______
A)
182.
B)
11.
C)
73.
D)
8.

41)
If a firm
has
$400,000
in credit
sales and
$80,000
in
average
accounts
receivabl
e, what
will
happen
to
average
days
collectio
ns if
accounts
receivabl
e
increases
?
41)
______
A)
Average days collections will stay the same.
B)
Average days collections will decrease.
C)
Average days collections will increase.
D)
Cannot tell with the information provided.

42)
If a firm
has
$400,000
in credit
sales and
$100,000
in
average
accounts
receivabl
e,
accounts
receivabl
e
turnover
is
42)
______
A)
5.
B)
25 percent.
C)
4.
D)
14.

43)
If a firm
has
$400,000
in credit
sales and
$50,000
in
average
account
receivabl
e,
average
days
collectio
n is
approxi
mately
43)
______
A)
5.563.
B)
29.2.
C)
45.63.
D)
292.

44)
Which of
the
followin
g would
NOT be
used in
an aging
schedule
of
accounts
receivabl
e?
44)
______
A)
outstanding balance
B)
percentage of cash sales
C)
percentage outstanding
D)
days outstanding
E)
customer

45)
Sarah's
Compute
r City
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
What is
her
approxi
mate
economi
c order
quantity?
45)
______
A)
289 boxes
B)
577 boxes
C)
409 boxes
D)
5,770 boxes
E)
2,890 boxes

46)
The
formula
for
calculati
ng EOQ
is
46)
______
A)
B)
C)
D)
E)
47)
Sarah's
Compute
r City
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
What is
her
approxi
mate
total
carrying
cost?
47)
______
A)
$216.75
B)
$306.75
C)
$432.75
D)
$2,167.50
E)
$4,327.50

48)
Sarah's
Compute
r City
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
What is
her
approxi
mate
total
ordering
cost?
48)
______
A)
$87
B)
$865
C)
$611
D)
$43
E)
$433

49)
Sarah's
Compute the discount if the formula for total cost is TC = DP + + ?
r City
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
Sarah's
vendor
said that
if she
purchase
d 1,000
boxes at
a time,
she
would
receive a
10
percent
discount.
What is
her total
cost with
49)
______
A)
$27,925
B)
$28,000
C)
$27,866
D)
$30,866

50)
Sarah's she orders her Economic Order Quantity without the discount if the formula for total cost is
Compute
r City
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
Sarah's
vendor
said that
if she
purchase
d 1,000
boxes at
a time,
she
would
receive a
10
percent
discount.
What is
her total
cost if
50)
______
A)
$28,000
B)
$27,866
C)
$27,925
D)
$30,866

51)
Sarah's
Compute Sarah order if the total cost formula is
r City
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
Sarah's
vendor
said that
if she
purchase
d 1,000
boxes at
a time,
she
would
receive a
10
percent
discount.
What
quantity
should
51)
______
A)
1,000
B)
578
C)
500
D)
5,000

52)
Sarah's
Compute is What is Sarah's annual carrying cost if she takes advantage of the
r City discount?
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
Sarah's
vendor
said that
if she
purchase
d 1,000
boxes at
a time,
she
would
receive a
10
percent
discount.
The total
cost
formula
52)
______
A)
$250
B)
$578
C)
$433
D)
$675

53)
Sarah's
Compute is What is Sarah's annual ordering cost if she takes advantage of the
r City discount?
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
Sarah's
vendor
said that
if she
purchase
d 1,000
boxes at
a time,
she
would
receive a
10
percent
discount.
The total
cost
formula
53)
______
A)
$250
B)
$578
C)
$433
D)
$675

54)
Sarah's
Compute is What is Sarah's annual ordering cost if she does NOT take advantage of
r City the discount?
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
Sarah's
vendor
said that
if she
purchase
d 1,000
boxes at
a time,
she
would
receive a
10
percent
discount.
The total
cost
formula
54)
______
A)
$250
B)
$578
C)
$433
D)
$675

55)
Sarah's
Compute is What is Sarah's annual carrying cost if she does NOT take advantage of
r City the discount?
sells
5,000
boxes of
CD-RW
compact
discs per
year. She
determin
ed that
she pays
$50 to
process
an order
for discs.
Her
purchase
price is
$6 for
each box
of discs
and she
has
determin
ed that
storage
costs for
one year
are 25
percent
of the
purchase
price.
Sarah's
vendor
said that
if she
purchase
d 1,000
boxes at
a time,
she
would
receive a
10
percent
discount.
The total
cost
formula
55)
______
A)
$250
B)
$578
C)
$433
D)
$675

56)
The total
cost
formula
is TC =
DP +

.
Which of
the
followin
g is true
at the
Economi
c Order
Quantity
?
56)
______
A)
EOQ =
B)
DP =
C)
=
D)
EOQ =

57)
Which of
the
followin
g is true
when
calculati
ng
Economi
c Order
Quantity
?
57)
______
A)
Ordering cost is equal to carrying cost.
B)
Total cost is equal to price times quantity.
C)
Ordering cost is less than carrying cost.
D)
Ordering cost is greater than carrying cost.

58)
If a fast
food
restaura
nt has
hamburg
er patties
in the
freezer,
these
would be
classified
as
________
inventor
y.
58)
______
A)
finished goods
B)
maintenance, repair, and operating
C)
raw materials
D)
work in progress

59)
If a fast
food
restaura
nt has
hamburg
er patties
on the
grill,
these
would be
classified
as
________
inventor
y.
59)
______
A)
finished goods
B)
maintenance, repair, and operating
C)
raw materials
D)
work in progress

60)
If a fast
food
restaura
nt has
hamburg
er patties
on a
serving
tray at
the cash
register,
these
would be
classified
as
________
inventor
y.
60)
______
A)
finished goods
B)
maintenance, repair, and operating
C)
raw materials
D)
work in progress

61)
If a fast
food
restaura
nt has a
box of
toilet
tissue
with 100
rolls
stored on
the same
shelf as
its paper
cups, the
box of
toilet
tissue
would be
classified
as
________
inventor
y.
61)
______
A)
finished
goods.
B)
maintenance, repair, and operating
C)
raw materials
D)
work in progress

62)
If a fast
food
restaura
nt has a
box of
toilet
tissue
with 100
rolls
stored
with its
paper
cups, the
box of
toilet
tissue
would be
classified
as
________
inventor
y and the
paper
cups
would be
classified
as
________
inventor
y.
62)
______
A)
finished goods; raw materials
B)
finished goods; work in progress
C)
maintenance, repair, and operating; raw materials
D)
maintenance, repair, and operating; work in progress

63)
John
assemble
s
compute
rs for the
Compute
r
Systems
to Go
Compan
y. His
company
purchase
s
Pentium
®
MMX™
chips
from
Intel.
When
John is
installing
the chip
it is
________
inventor
y, but for
Intel it is
________
inventor
y.
63)
______
A)
raw material;
work in
process
B)
work in process; finished goods
C)
raw material;
finished goods
D)
finished goods; raw material

64)
When
using an
ABC
inventor
y
analysis,
the
inventor
y items
that
make up
approxi
mately
________
percent
but
account
for
approxi
mately
________
percent
of total
costs are
classified
as A
items.
64)
______
A)
10-15; 75
B)
10-15; 10-15
C)
75-80; 10-15
D)
75-80; 75-80

65)
When
using an
ABC
inventor
y
analysis,
the
inventor
y items
that
make up
approxi
mately
________
percent
but
account
for
approxi
mately
________
percent
of total
costs are
classified
as B
items.
65)
______
A)
10-15; 75
B)
10-15; 10-15
C)
75-80; 10-15
D)
75-80; 75-80

66)
When
using an
ABC
inventor
y
analysis,
the
inventor
y items
that
make up
approxi
mately
________
percent
but
account
for
approxi
mately
________
percent
of total
costs are
classified
as C
items.
66)
______
A)
10-15; 75
B)
10-15; 10-15
C)
75-80; 10-15
D)
75-80; 75-80

67)
Randy
Jones
decided
to run an
ABC
analysis
of his 500
stock
keeping
inventor
y items.
He
found
that his
average
inventor
y was
$200,000
and that
there
were 50
items out
of the
500 that
cost him
$153,000.
These 50
items
would be
classified
as
________
items.
67)
______
A)
A
B)
B
C)
C
D)
D

68)
Randy
Jones
decided
to run an
ABC
analysis
of his 500
stock
keeping
inventor
y items.
He
found
that his
average
inventor
y was
$200,000
and that
there
were 50
items out
of the
500 that
cost him
$23,000.
These 50
items
would be
classified
as
________
items.
68)
______
A)
A
B)
B
C)
C
D)
D

69)
Randy
Jones
decided
to run an
ABC
analysis
of his 500
stock
keeping
inventor
y items.
He
found
that his
average
inventor
y was
$200,000
and that
there
were 378
items out
of the
500 that
cost him
$24,000.
These
378 items
would be
classified
as
________
items.
69)
______
A)
A
B)
B
C)
C
D)
D

70)
Which of
the
followin
g are
similar?
70)
______
A)
credit card
B)
line of credit
C)
short-term loan
D)
A and B above
E)
B and C above

71)
A bank
loan that
only
incurs
finance
charges
and
payment
obligatio
ns when
used for
a
business
is a
71)
______
A)
note payable.
B)
promissory note.
C)
line of credit.
D)
all of the above.

72)
Business
obligatio
ns that
are
normally
paid
within
one year
are
72)
______
A)
long-term
debt.
B)
mortgages.
C)
equipment
loans.
D)
short-term debt.

73)
The
primary
concern
in
current
liabilities
manage
ment is
to pay
obligatio
ns
73)
______
A)
when they are
due.
B)
before they are due.
C)
after they are
due.
D)
All of the above are concerns.

74)
The
primary
differenc
e
between
a line of
credit
and a
short-
term
loan is
74)
______
A)
we borrow need for the current month with both the short-term loan and the line of credit.
only what we
B)
we borrow the entire amount with both the short-term loan and the line of credit.
C)
we borrow the with the short-term loan, but borrow only what we need with the line of credit.
entire amount
D)
we make payments on the line of credit every month to insure that we will have good credit.

75)
If we
borrowe
d $10,000
on a line
of credit
Septemb
er 1, and
the bank
charges
12
percent
per
annum,
compou
nded
daily, the
daily
interest
due on
the line
of credit
is
approxi
mately
75)
______
A)
$0.03
B)
$3.28.
C)
$4.00.
D)
$10.00.

76)
If we
borrowe
d $10,000
on a line
of credit
Septemb
er 1, and
the bank
charges
12
percent
per
annum,
compou
nded
daily, the
interest
due on
October
1 is
approxi
mately
76)
______
A)
$33.80.
B)
$40.00.
C)
$98.63.
D)
$100.00.

77)
Which of
the
followin
g
typically
is NOT
classified
as an
accrued
liability?
77)
______
A)
state
employment
taxes
B)
monthly sales tax owed to the city
C)
federal
employment
taxes
D)
monthly mortgage payments

78)
The
obligatio
ns of a
business
that are
accumul
ated
during
the
normal
course of
a
business
are
78)
______
A)
short-term
debt.
B)
actual liabilities.
C)
long-term
debt.
D)
accrued liabilities.

79)
The
largest
part of
business
accounts
payable
are
normally
79)
______
A)
the monthly payroll owed to employees.
B)
obligations of a firm that were accumulated and are owed to governmental agencies.
C)
the monthly obligations that were contracted for, like mortgage payments, insurance, and utilities.
D)
obligations of our firm that were obtained by purchasing inventory on credit.

80)
Proper
manage
ment of
accounts
payable
will
guarante
e that a
firm
80)
______
A)
pays the maximum due to each vendor.
B)
pays each bill early to avoid penalties and interest.
C)
pays some bills early and some late to obtain an average payment of on time.
D)
pays the minimum due to each vendor.

81)
The
BEST
way to
pay the
minimu
m price
to a
vendor is
to take
advantag
e of
81)
______
A)
both trade discounts and cash discounts.
B)
neither discount, but to pay the invoice price on the due date.
C)
trade discounts, but not cash discounts.
D)
cash discounts, but not trade discounts.

82)
Trade
discount
s are
provided
to our
firm
82)
______
A)
because we trade with the vendor.
B)
because we provided specific services for our vendor as specified by the vendor.
C)
because we provided specific services for our vendor as specified by us.
D)
because we are smart enough to calculate the discount and take advantage of it.

83)
Sam's If Sam advertises these washers in the Sunday paper and has a prominent display in his store,
Discount but charges $50 for delivery and setup, he will pay the vendor ________ for each washing
Applianc machine.
e
Compan
y just
received
a
shipment
of 30
washing
machines
. The
invoice
list price
for each
washing
machine
is $365.
The
manufact
urer's
catalogu
e
indicates
that Sam
can take
the
followin
g
discount
s:
30/15/10
with 30
percent
being the
normal
markup,
15
percent
for free
delivery
and
hookup,
and 10
percent
for local
advertisi
ng and
point-of-
sale
displays.
83)
______
A)
$217.18
B)
$219.00
C)
$229.95
D)
$255.50

84)
Sam's If Sam provides free delivery and hookup, advertises these washers in the Sunday paper and has
Discount a prominent display in his store, he will pay the vendor ________ for each washing machine.
Applianc
e
Compan
y just
received
a
shipment
of 30
washing
machines
. The
invoice
list price
for each
washing
machine
is $365.
The
manufact
urer's
catalogu
e
indicates
that Sam
can take
the
followin
g
discount
s:
30/15/10
with 30
percent
being the
normal
markup,
15
percent
for free
delivery
and
hookup,
and 10
percent
for local
advertisi
ng and
point-of-
sale
displays.
84)
______
A)
$195.46
B)
$255.50
C)
$229.95
D)
$200.75

85)
Sam's If Sam does not advertise this brand of washer and charges $50 for delivery and setup, he will
Discount pay the vendor ________ for each washing machine.
Applianc
e
Compan
y just
received
a
shipment
of 30
washing
machines
. The
invoice
list price
for each
washing
machine
is $365.
The
manufact
urer's
catalogu
e
indicates
that Sam
can take
the
followin
g
discount
s:
30/15/10
with 30
percent
being the
normal
markup,
15
percent
for free
delivery
and
hookup,
and 10
percent
for local
advertisi
ng and
point-of-
sale
displays.
85)
______
A)
$229.95
B)
$219.00
C)
$255.50
D)
$217.18

86)
Sam's If Sam performs all services required by the vendor, his single equivalent discount will be
Discount
Applianc
e
Compan
y just
received
a
shipment
of 30
washing
machines
. The
invoice
list price
for each
washing
machine
is $365.
The
manufact
urer's
catalogu
e
indicates
that Sam
can take
the
followin
g
discount
s:
30/15/10
with 30
percent
being the
normal
markup,
15
percent
for free
delivery
and
hookup,
and 10
percent
for local
advertisi
ng and
point-of-
sale
displays.
86)
______
A)
53.55%.
B)
55.00%.
C)
46.45%.
D)
45.00%.

87)
Sam's If Sam performs all services required by the vendor, his net cost rate factor will be
Discount
Applianc
e
Compan
y just
received
a
shipment
of 30
washing
machines
. The
invoice
list price
for each
washing
machine
is $365.
The
manufact
urer's
catalogu
e
indicates
that Sam
can take
the
followin
g
discount
s:
30/15/10
with 30
percent
being the
normal
markup,
15
percent
for free
delivery
and
hookup,
and 10
percent
for local
advertisi
ng and
point-of-
sale
displays.
87)
______
A)
53.55%.
B)
46.45%.
C)
55.00%.
D)
45.00%.

88)
Trade
discount
s are
offered
________
and cash
discount
s are
offered
________
.
88)
______
A)
to speed up collection of credit accounts; to speed up collection of trade accounts
B)
for specific services performed for the vendor; to speed up collection of credit sales
C)
to speed up collection of credit sales; for specific services performed for the vendor
D)
for specific services performed by credit customers; for specific services performed by cash customers

89)
Sarah
just
received
an
invoice
for
$12,000
with
terms of
2/10,
n/30. The
invoice
date was
June 1.
Her
contract
with the
vendor
indicates
a charge
of 1.5
percent
per
month
on late
payment
s. If
Sarah
pays this
bill on
June 15,
she will
send the
vendor a
check for
89)
______
A)
$11,760.
B)
$12,000.
C)
$12,180.
D)
Cannot answer without more information.

90)
Sarah
just
received
an
invoice
for
$12,000
with
terms of
2/10,
n/30. The
invoice
date was
June 1.
Her
contract
with the
vendor
indicates
a charge
of 1.5
percent
per
month
on late
payment
s. If
Sarah
pays this
bill on
June 5,
she will
send the
vendor a
check for
90)
______
A)
$11,760.
B)
$12,000.
C)
$12,180.
D)
Cannot answer without more information.

91)
Sarah
just
received
an
invoice
for
$12,000
with
terms of
2/10,
n/30. The
invoice
date was
June 1.
Her
contract
with the
vendor
indicates
a charge
of 1.5
percent
per
month
on late
payment
s. If
Sarah
pays this
bill on
July 15,
she will
send the
vendor a
check for
91)
______
A)
$11,760.
B)
$12,000.
C)
$12,180.
D)
Cannot answer without more information.

92)
Sarah
just
received
an
invoice
for
$12,000
with
terms of
2/10,
n/30. The
invoice
date was
June 1.
Her
contract
with the
vendor
indicates
a charge
of 1.5
percent
per
month
on late
payment
s. If
Sarah
pays this
bill on
June 30,
she will
pay
effective
annual
interest
on this
account
of
approxi
mately
92)
______
A)
24%.
B)
30%.
C)
36.7%.
D)
18%.
1)
FAL SE
2)
TRU E
3)
TRU E
4)
FAL SE
5)
TRU E
6)
FAL SE
7)
TRU E
8)
FAL SE
9)
TRU E
10)
FAL SE
11)
TRU E
12)
TRU E
13)
FAL SE
14)
TRU E
15)
FAL SE
16)
FAL SE
17)
FAL SE
18)
TRU E
19)
FAL SE
20)
TRU E
21)
E
22)
A
23)
B
24)
A
25)
E
26)
D
27)
A
28)
D
29)
B
30)
C
31)
C
32)
D
33)
C
34)
E
35)
D
36)
D
37)
D
38)
C
39)
C
40)
D
41)
C
42)
C
43)
C
44)
B
45)
B
46)
A
47)
C
48)
B
49)
A
50)
D
51)
A
52)
D
53)
A
54)
C
55)
C
56)
C
57)
A
58)
C
59)
D
60)
A
61)
B
62)
C
63)
B
64)
A
65)
B
66)
C
67)
A
68)
B
69)
C
70)
D
71)
C
72)
C
73)
A
74)
C
75)
B
76)
C
77)
D
78)
D
79)
D
80)
D
81)
A
82)
B
83)
C
84)
A
85)
C
86)
C
87)
A
88)
B
89)
B
90)
A
91)
C
92)
C