Question 1

The single equivalent discount rate of the trade discount 5/4/1 is:

Accepted Answer

A) 0.09712 
B) 0.90288 
C) 0.00002 
D) 0.99998 
E) None of these 
A) 0.09712 
B) 0.90288 
C) 0.00002 
D) 0.99998 
E) None of these

Question 2

The single equivalent discount rate is found by taking the net price equivalent rate and adding it to 1.

Accepted Answer

A) True 
 B)False

Question 3

Which month has 30 days?

Accepted Answer

A) January 
B) May 
C) June 
D) July 
E) None of these 
A) January 
B) May 
C) June 
D) July 
E) None of these

Question 4

Calculate the End of Discount Period and End of Credit Period.
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Date of Invoice } & \text { Terms } & \begin{array} { l } 
\text { End of Discount } \
\text { Period }
\end{array} & \begin{array} { l } 
\text { End of Credit } \
\text { Period }
\end{array} \
\hline \text { Nov } 28 & 2 / 10 \text { EOM } & \text { ? } & \text { ? } \
\hline
\end{array}$$

Accepted Answer

The answer of Calculate the End of Discount Period and...

Question 5

Trade discounts represent increases to the purchase price.

Accepted Answer

A) True 
 B)False

Question 6

A local RadioShack store wants to buy a new line of plasma TVs. Manufacturer A offers chain discounts of 18/12, and Manufacturer B offers terms of 17/13. Which single equivalent discount rate is the best deal?

Accepted Answer

A) 0.7221: Manufacturer A 
B) 0.7216: Manufacturer B 
C) 0.2779: Manufacturer A 
D) 0.2784: Manufacturer A 
E) None of these 
A) 0.7221: Manufacturer A 
B) 0.7216: Manufacturer B 
C) 0.2779: Manufacturer A 
D) 0.2784: Manufacturer A 
E) None of these

Question 7

An invoice dated March 6 with terms of 1/10, EOM results in the end of the discount period on:

Accepted Answer

A) May 10 
B) April 10 
C) May 30 
D) May 31 
E) None of these 
A) May 10 
B) April 10 
C) May 30 
D) May 31 
E) None of these

Question 8

Net price times rate of trade discount equals amount of trade discount.

Accepted Answer

A) True 
 B)False

Question 9

50 days from July 9 is August 28.

Accepted Answer

A) True 
 B)False

Question 10

2/10, n/30 is an example of:

Accepted Answer

A) Ordinary dating 
B) Receipt of goods 
C) End of month 
D) Extra dating 
E) None of these 
A) Ordinary dating 
B) Receipt of goods 
C) End of month 
D) Extra dating 
E) None of these

Question 11

Match the following terms with their definitions.
-Chain discount

Accepted Answer

A) Criteria on invoice 
B) Seller pays cost of freight 
C) Could be calculated by table look-up 
D) Savings from early payment 
E) Cash discount within first 10 days in next month after sale
F)Amount of time to take advantage of a cash discount
G)Discount period begins when goods are received
H)100% less stated percent
I)List price minus amount of trade discount
J)Time period sellers give buyers to pay invoices
K)1 - net price equivalent rate
L)Buyer pays cost of freight
M)Actual cost to buyer per dollar
N)2/10, n/30
O)Two or more trade discounts
P)List price minus net price
Q)Suggested retail price 
A) Criteria on invoice 
B) Seller pays cost of freight 
C) Could be calculated by table look-up 
D) Savings from early payment 
E) Cash discount within first 10 days in next month after sale
F)Amount of time to take advantage of a cash discount
G)Discount period begins when goods are received
H)100% less stated percent
I)List price minus amount of trade discount
J)Time period sellers give buyers to pay invoices
K)1 - net price equivalent rate
L)Buyer pays cost of freight
M)Actual cost to buyer per dollar
N)2/10, n/30
O)Two or more trade discounts
P)List price minus net price
Q)Suggested retail price

Question 12

Buffy Rich wants to buy a new line of stereos for her shop. Manufacturer A offers trade discounts of 20/14, and Manufacturer B offers trade discounts of 25/7. Assuming both manufacturers have the same list price, which manufacturer should Buffy buy from?

Accepted Answer

Manufacturer A has the larger trade disc

Question 13

The complement of 35% is:

Accepted Answer

A) 53% 
B) 65% 
C) 56% 
D) 165% 
E) None of these 
A) 53% 
B) 65% 
C) 56% 
D) 165% 
E) None of these

Question 14

Calculate (A)cash discount and (B)net amount paid:
 $\begin{array}{|c|c|c|c|c|c|c|}
\hline \begin{array}{l}
\text { Gross Invoice } \
\text { (including freight) }
\end{array} & \text { Freight } & \begin{array}{l}
\text { Date of } \
\text { Invoice }
\end{array} & \text { Terms } & \begin{array}{l}
\text { Date of } \
\text { Payment }
\end{array} & \begin{array}{l}
\text { Cash } \
\text { Discount }
\end{array} & \begin{array}{l}
\text { Net Amount } \
\text { Paid }
\end{array} \
\hline \$1,800& \$ 50 & 8 / 11 & \begin{array}{l}
2 / 10,1 / 15 \
n / 30
\end{array} & 122 & \text { (A) } & \text { (B) } \
\hline
\end{array}$

Accepted Answer

A. $17.50;

Question 15

Cash discounts are not taken on freight or returned goods.

Accepted Answer

A) True 
 B)False

Question 16

Bill's TV buys a television from a wholesaler with a list price of $600 and a trade discount of 32%. What is the amount of the trade discount and what is the net price of the television?

Accepted Answer

Multiply the list price by 32%

Question 17

A local college bookstore paid a net price of $12,500 for textbooks for the coming semester. The publisher offered a trade discount of 20%. The publisher's original list price was:

Accepted Answer

A) $15,000 
B) $15,500 
C) $15,625 
D) $2,500 
E) None of these 
A) $15,000 
B) $15,500 
C) $15,625 
D) $2,500 
E) None of these

Question 18

A cash discount sometimes is taken on the amount of trade discount.

Accepted Answer

A) True 
 B)False

Question 19

Calculate the net price and amount of trade discount (use net price equivalent rate as well as single equivalent discount rate):
 $$\begin{array} { | l | l | l | l | l | } 
\hline\text { Item } & \text { List Price } & \text { Chain Discount } & \text { Net Price } & \text { Trade Discount } \
\hline \begin{array} { l } 
\text { Troy-Bilt lawn } \
\text { mower }
\end{array} & \$ 499 & 7 / 9 &? &? \
\hline 
\end{array}$$

Accepted Answer

Net Price:

Question 20

Find amount of (A)net price and (B)trade discount
 $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Item } & \text { List Price } & \text { Chain Discount } & \text { Net Price } ( \mathrm { A } ) & \text { Trade Discount } ( \mathrm { B } ) \
\hline \text { Dishwasher } & \$ 1400 & 13 / 10 / 4 & ? & ? \
\hline
\end{array}$$

Accepted Answer

A. $1,052.

Exam 7: Discounts: Trade and Cash

The single equivalent discount rate of the trade discount 5/4/1 is:

The single equivalent discount rate is found by taking the net price equivalent rate and adding it to 1.

Which month has 30 days?

Calculate the End of Discount Period and End of Credit Period. Date of Invoice Terms End of Discount Period End of Credit Period Nov 28 2/10 EOM ? ?

Trade discounts represent increases to the purchase price.

A local RadioShack store wants to buy a new line of plasma TVs. Manufacturer A offers chain discounts of 18/12, and Manufacturer B offers terms of 17/13. Which single equivalent discount rate is the best deal?

An invoice dated March 6 with terms of 1/10, EOM results in the end of the discount period on:

Net price times rate of trade discount equals amount of trade discount.

50 days from July 9 is August 28.

2/10, n/30 is an example of:

Match the following terms with their definitions. -Chain discount

Buffy Rich wants to buy a new line of stereos for her shop. Manufacturer A offers trade discounts of 20/14, and Manufacturer B offers trade discounts of 25/7. Assuming both manufacturers have the same list price, which manufacturer should Buffy buy from?

The complement of 35% is:

Calculate (A)cash discount and (B)net amount paid: Gross Invoice (including freight) Freight Date of Invoice Terms Date of Payment Cash Discount Net Amount Paid \1 ,800 \ 50 8/11 2/10,1/15 n/30 122 (A) (B)

Cash discounts are not taken on freight or returned goods.

Bill's TV buys a television from a wholesaler with a list price of $600 and a trade discount of 32%. What is the amount of the trade discount and what is the net price of the television?

A local college bookstore paid a net price of $12,500 for textbooks for the coming semester. The publisher offered a trade discount of 20%. The publisher's original list price was:

A cash discount sometimes is taken on the amount of trade discount.

Calculate the net price and amount of trade discount (use net price equivalent rate as well as single equivalent discount rate): Item List Price Chain Discount Net Price Trade Discount Troy-Bilt lawn mower \ 499 7/9 ? ?

Find amount of (A)net price and (B)trade discount Item List Price Chain Discount Net Price () Trade Discount () Dishwasher \ 1400 13/10/4 ? ?

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