Question 1

The total sales revenue of a small business is a direct reflection of

Accepted Answer

A)  sales volume and credit terms. 
B)  price and credit terms. 
C)  price and expenses. 
D)  sales volume and price. 
A)  sales volume and credit terms. 
B)  price and credit terms. 
C)  price and expenses. 
D)  sales volume and price.

Question 2

An important source of credit information is the customer's previous credit history.

Accepted Answer

A) True 
 B)False

Question 3

Match the term with its definition.
-The extent to which a good or service is perceived by a customer as meeting his or her needs or wants, measured by the customer's willingness to pay for it

Accepted Answer

A) consumer credit 
B) credit 
C) credit bureaus 
D) credit card 
E) installment account
F)open charge account
G)revolving charge account
H)trade credit
I)trade-credit agencies
J)value 
A) consumer credit 
B) credit 
C) credit bureaus 
D) credit card 
E) installment account
F)open charge account
G)revolving charge account
H)trade credit
I)trade-credit agencies
J)value

Question 4

A small business in competition with larger firms is seldom in a position to function as a price leader.

Accepted Answer

A) True 
 B)False

Question 5

Richard is an independent contractor and buys materials from a local builders supply store. He takes possession of the products immediately and the store bills him at the end of the month. The store is providing a(n)

Accepted Answer

A)  installment account. 
B)  open charge account. 
C)  revolving account. 
D)  selective account. 
A)  installment account. 
B)  open charge account. 
C)  revolving account. 
D)  selective account.

Question 6

Prestige pricing (setting a high price to convey an image of high quality or uniqueness) is a pricing tactic that reflects competitive advantage.

Accepted Answer

A) True 
 B)False

Question 7

Markups may be expressed as a percentage of either the firm's cost or the industry-standard cost.

Accepted Answer

A) True 
 B)False

Question 8

Within the framework of a break-even analysis, an examination of _____ is conducted to determine the quantity at which the product, with an assumed price, will generate enough revenue to start earning a profit.

Accepted Answer

A)  costs 
B)  revenues 
C)  sales forecasts 
D)  costs and revenue 
A)  costs 
B)  revenues 
C)  sales forecasts 
D)  costs and revenue

Question 9

If a small business has products that compete with one another, pricing decisions must take into account the effects of a single product price on the rest of the line.

Accepted Answer

A) True 
 B)False

Question 10

Commissions paid to a salesperson would be included in

Accepted Answer

A)  cost of goods sold. 
B)  human resources. 
C)  operating expenses. 
D)  administrative costs. 
A)  cost of goods sold. 
B)  human resources. 
C)  operating expenses. 
D)  administrative costs.

Question 11

For installment selling, the amount of credit should not exceed the repossession value of the goods sold.

Accepted Answer

A) True 
 B)False

Question 12

Markup pricing may be expressed in terms of a percentage of either the _____ or the cost.

Accepted Answer

A)  quantity 
B)  operating expenses 
C)  selling price 
D)  estimated expenses 
A)  quantity 
B)  operating expenses 
C)  selling price 
D)  estimated expenses

Question 13

An installment account is a typical trade credit agreement.

Accepted Answer

A) True 
 B)False

Question 14

The bad-debt ratio is the ratio of bad debts to total sales.

Accepted Answer

A) True 
 B)False

Question 15

Profit should always be at the heart of a pricing strategy.

Accepted Answer

A) True 
 B)False

Question 16

Fine Framings, a small framing shop, uses markup pricing to arrive at a final selling price. The firm sells its frames at a price of $25, given a $15 unit cost. Fine Framings' markup on the selling price is _____, and its markup on cost is _____.

Accepted Answer

A)  66 2/3 percent; 40 percent 
B)  40 percent; 66 2/3 percent 
C)  167 percent; 67 percent 
D)  250 percent; 100 percent 
A)  66 2/3 percent; 40 percent 
B)  40 percent; 66 2/3 percent 
C)  167 percent; 67 percent 
D)  250 percent; 100 percent

Question 17

One of the benefits of extending credit to buyers is that doing so provides better records of purchases on credit billing statements.

Accepted Answer

A) True 
 B)False

Question 18

Quality Cars, an independent used car dealership, utilizes long-term consumer credit in its business. Typically, consumers are allowed to place a 15 percent down payment on an automobile. Then, over a period of 48 months, the consumer is allowed to make payments on the balance of the account, which includes compound interest of 2 percent monthly on the unpaid portion. Quality Cars is employing _____ in its business.

Accepted Answer

A)  open charge accounts 
B)  installment accounts 
C)  revolving charge accounts 
D)  selective accounts 
A)  open charge accounts 
B)  installment accounts 
C)  revolving charge accounts 
D)  selective accounts

Question 19

Which of the following "C's" defines the customer's ability to conserve assets?

Accepted Answer

A)  Capacity 
B)  Character 
C)  Collateral 
D)  Conditions 
A)  Capacity 
B)  Character 
C)  Collateral 
D)  Conditions

Question 20

To ensure prompt payment, a business extending credit should have adequate billing records and collection procedures.

Accepted Answer

A) True 
 B)False

Exam 16: Pricing and Credit Decisions

The total sales revenue of a small business is a direct reflection of

An important source of credit information is the customer's previous credit history.

Match the term with its definition. -The extent to which a good or service is perceived by a customer as meeting his or her needs or wants, measured by the customer's willingness to pay for it

A small business in competition with larger firms is seldom in a position to function as a price leader.

Richard is an independent contractor and buys materials from a local builders supply store. He takes possession of the products immediately and the store bills him at the end of the month. The store is providing a(n)

Prestige pricing (setting a high price to convey an image of high quality or uniqueness) is a pricing tactic that reflects competitive advantage.

Markups may be expressed as a percentage of either the firm's cost or the industry-standard cost.

Within the framework of a break-even analysis, an examination of _____ is conducted to determine the quantity at which the product, with an assumed price, will generate enough revenue to start earning a profit.

If a small business has products that compete with one another, pricing decisions must take into account the effects of a single product price on the rest of the line.

Commissions paid to a salesperson would be included in

For installment selling, the amount of credit should not exceed the repossession value of the goods sold.

Markup pricing may be expressed in terms of a percentage of either the _____ or the cost.

An installment account is a typical trade credit agreement.

The bad-debt ratio is the ratio of bad debts to total sales.

Profit should always be at the heart of a pricing strategy.

Fine Framings, a small framing shop, uses markup pricing to arrive at a final selling price. The firm sells its frames at a price of $25, given a $15 unit cost. Fine Framings' markup on the selling price is _____, and its markup on cost is _____.

One of the benefits of extending credit to buyers is that doing so provides better records of purchases on credit billing statements.

Which of the following "C's" defines the customer's ability to conserve assets?

To ensure prompt payment, a business extending credit should have adequate billing records and collection procedures.

The Entrepreneurial Lifethe Entrepreneurial Life

Integrity, Ethics, and Social Entrepreneurship

Starting a Small Business

Franchises and Buyouts

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Organizational Plan: Teams, Legal Structures, Alliances, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Promotional Planning

Global Opportunities for Small Businesses

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing the Firms Assets

Managing Risk

Filters

Fine Framings, a small framing shop, uses markup pricing to arrive at a final selling price. The firm sells its frames at a price of $25, given a $15 unit cost. Fine Framings' markup on the selling price is _, and its markup on cost is _.