Question-1
Product costs are increased by the presence of middlepersons in the distrubution channel.
A. True
B. False
Question-2
Determine the extension amount of the following order:
Product X: 10 units @ $2.35 each
Product Y: 12 boxes @ $6.15 per box
Product Z: 3 dozen @ $12.20 per dozen
A. $20.70
B. $133.90
C. $172.50
D. $536.50
Question-3
A trader buys 3 dozen units of product X for a total of $158.40. What is the unit cost?
A. $4.40
B. $6.60
C. $44.40
D. $52.80
Question-4
A trader can purchase a good at $7.20 per unit, or they can buy 5 for $33.00. What is the total amount saved by buying in bulk?
A. $0.60
B. $0.90
C. $2.00
D. $3.00
Question-5
A wholesaler lists a refrigerator model at a price of $850 and offers a chain discount of 20% and 10%. What is the net price?
A. $476
B. $595
C. $612
D. $644
Question-6
A store receives $400 cash after offering a chain discount of 10/10/5 on a good. What was the list price?
A. $492.20
B. $519.82
C. $533.33
D. $612.00
Question-7
Merchandise lists for $5,000 with a trade discount of 10% and terms of 5/30, 3/60, n/90. If the purchaser is invoiced on April 12th and payment is made on June 10th, what is the actual amount paid?
A. $4,275
B. $4,350
C. $4,365
D. $4,500
Question-8
An invoice for product X totals $1,200 and is dated July 6, 2000 with terms 2/10-60X. If the invoice is paid on September 3, 2000, what is the net amount of payment?
A. $912
B. $1,152
C. $1,176
D. $1,200
Question-9
A good purchased for $480 sells for $700. If the store's operating expenses are 30% of cost, what is the percentage markup on cost?
A. 1.5%
B. 10.57%
C. 15.83%
D. 45.83%
Question-10
A retailer sells a clothing item for $49.99. If the retailer maintains a 40% markup on cost, how much can it afford to pay for the item?
A. $29.99
B. $32.22
C. $35.71
D. $36.58
Question-11
Determine the selling price of a good if it is purchased for $36 and the firm wants to earn a markup of 40% on the selling price.
A. $44.00
B. $50.40
C. $54.00
D. $60.00
Question-12
An item bought for $32 is sold for $40. What is the markup based on price?
A. 20%
B. 25%
C. 33.33%
D. 40%
Question-13
A retailer wants to sell an item that costs $18 at a list price that will provide a 25% markup on the selling price and give the customer a 40% discount. What is the list price?
A. $20.16
B. $24.00
C. $31.50
D. $40.00
Question-14
A flower shop buys 200 mixed fresh flower arrangements for $4.50 per arrangement. The owner estimates that 10% will wilt before they are sold and will have to be discarded. If the store requires a 50% markup on the selling price, what is the price per arrangement?
A. $8.15
B. $10.00
C. $10.87
D. $11.96
Question-15
A baker makes 500 cream-filled eclairs at a cost of $0.72 each. He estimates that 10% of the eclairs will be sold the following day at a reduced price of $0.80 each. Find the marked price if the baker wishes to obtain a 75% markup on cost.
A. $1.27
B. $1.31
C. $1.33
D. $1.45
Question-16
A vendor reduces an item listed at $140 on July 1st by 20%, and then reduces it another 25% on September 1st. What is the sale price of the good after the last reduction?
A. $77.00
B. $84.00
C. $92.00
D. $108.50
Question-17
A(n) _______ loss occurs when the reduced price is below the actual cost.
A. net
B. operating
C. absolute
D. incurred
Question-18
A merchant buys a good for $275. Their store's operating expenses are 35% of cost. The selling price of the good is $549, but is marked down by 35%. The transaction resulted in a:
A. net loss of $110.30.
B. net loss of $60.48.
C. net loss of $14.40.
D. net profit of $2.07.
Question-19
A trader buys a good at a cost of $8.00 per unit. Operating expenses are 35% of the selling price and net profit is 15% of the selling price. What is the maximum dollar markdown allowed without incurring an operating loss on the sale of the good?
A. $1.50
B. $2.25
C. $2.40
D. $4.88
Question-20
An asset is purchased for $50,000. It has an estimated useful life of 12 years and a salvage value of $5,000. What is the annual depreciation of the asset using the straight-line method?
A. $3,750.00
B. $4,000.00
C. $4,500.00
D. $4,583.33
Question-21
An asset purchased by Able Corporation for $15,000 on 01/01/1997 also incurred freight charges of $200 and installation cost of $1,000. The asset had a life expectancy of eight years and a salvage value of $2,800. What are the accumulated straight-line depreciation and book value on 01/01/2000?
A. $1,675; $9,975
B. $5,025; $11,175
C. $1,875; 10,575
D. $6,075; $10,125
Question-22
Parker Inc. purchased a $30,000 asset with a salvage value of $1,200 and an estimated useful life of three years.  What is the book value at the end of years one and two using the 150% declining balance method?
A. $30,000 and $15,000
B. $25,000 and $15,000
C. $30,000 and $7,500
D. $15,000 and $7,500
Question-23
An asset is purchased for $50,000. It has an estimated useful life of eight years and salvage value of $6,000. If the asset is depreciated using the double-declining balance method, what are the depreciation expense and book value at the end of year two?
A. $5,468.75; $38,281.25
B. $8,250; $30,750
C. $9,375; $28,125
D. $11,000; $28,000
Question-24
A machine costs $40,000, has a salvage value of $8,000, and is expected to have a useful life of 100,000 hours. If it is utilized for a total of 8,000 hours in year one, what is the depreciation expense based on the unit-of-production-method at the end of the year?
A. $2,560
B. $3,200
C. $4,000
D. $25,000
Question-25
Baker Company purchases a new delivery truck for $20,000. The truck is expected to have a useful life of 90,000 miles before replacement, and a salvage value of $2,000. In its first year the truck was driven 22,000 miles, and a further 19,000 miles in year two. What is the depreciation expense and book value at the end of year two?
A. $3,800; $11,800
B. $4,400; $11,200
C. $4,222.22; $10,888.88
D. $8,200; $9,800
Question-26
A delivery truck is purchased for $38,000, has a salvage value of $6,000 and is depreciated using MACRS. What is the first-year depreciation expense?
A. $4,578.80
B. $5,430.20
C. $7,600.00
D. $15,200.00
Question-27
Dennison Property Company purchases a new office space for lease to small businesses for $2,400,000, including a land value of $400,000. The property is placed in service on March 15, 1999. Using MACRS, what is the depreciation on this property at the end of its first year?
A. $40,660
B. $43,656
C. $50,260
D. $57,850
Question-28
The periodic deduction allowed by the Internal Revenue Service to recover the cost of a business asset that is used more than one year is called:
A. depreciated value.
B. recovered cost.
C. specific cost.
D. depreciation.
Question-29
The amount of the periodic deduction is reported as _________ in the income statement and as an increase in the _________ of the asset in the balance sheet.
A. a decrease in asset value; value
B. the current cost estimate; residual value
C. depreciation expense; accumulated depreciation
D. actual value; depreciation
Question-30
The _________ of an asset is the value reported in the balance sheet after deducting the accumulated depreciation from the total cost of the asset when it is placed in service.
A. book value
B. retail price
C. average cost
D. specific cost
