Question 1

Credit bureaus maintain credit histories on individuals based on information reported to them by banks,mortgage companies,department stores,and other creditors.

Accepted Answer

This statement is true. Credit bureaus such as Equifax, Experian, and TransUnion collect and maintain credit information provided by various sources. This information is used to create credit reports and scores, which are used by lenders to make decisions about whether to extend credit to an individual.

Question 2

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

Accepted Answer

The bad-debt ratio is the ratio of bad debts to total accounts receivable, not total sales.

Question 3

Active Feet,a small manufacturer of shoes,hired an additional vice-president and purchased a barrel of synthetic rubber used to make shoe soles.These two expenses should be considered a(n)____ and a(n)____,respectively.

Accepted Answer

The hiring of an additional vice-president would be considered an overhead cost as it is a fixed cost incurred in the production process. Similarly, the purchase of synthetic rubber used to make shoe soles would be considered a cost of goods sold as it is a variable cost directly associated with the production of the shoes. Therefore, option B which includes overhead cost and cost of goods sold is the best choice.

Question 4

In general,products that are consumed in fixed amounts have

Accepted Answer

When a product is consumed in fixed amounts, the demand for the product does not vary with changes in its price. Hence, the demand elasticity of the product is low and it is said to have an inelastic demand.

Question 5

Diamonds and other jewels often carry a high price to convey an image of high quality or uniqueness.This type of pricing is known as

Accepted Answer

Prestige pricing is used to create a high-end image for a product and is often applied to luxury goods such as diamonds and other jewels. This pricing strategy emphasizes the quality and uniqueness of the product, which justifies the high price. Skimming pricing is a strategy in which a high price is set initially to maximize profits, but it is typically used for new and innovative products. Penetration pricing is a pricing strategy that involves setting a low price to enter a market and gain market share. Variable pricing is a pricing strategy that involves adjusting prices based on various factors such as time, location, or customer demographics.

Question 6

The seller's measure of what he or she is willing to receive in exchange for transferring ownership or use of a product or service is

Accepted Answer

The measure of what the seller is willing to receive in exchange for a product or service is known as the price. This represents the amount of money that the buyer is expected to pay the seller in exchange for the product or service. So, Option D is the correct answer.

Question 7

If the owner of Clarrisa's Fine Jewelry instructed the sales team to stress the uniqueness of the store's hand designed jewelry,a ____ pricing strategy would be expected.

Accepted Answer

The instruction to stress the uniqueness of the hand designed jewelry suggests that the store is positioning itself as a high-end or luxury brand, which is commonly associated with a prestige pricing strategy. This involves setting prices higher than competitors to convey exclusivity and signal high quality.

Question 8

The aging schedule is a categorization of accounts receivable based on the length of time they have been outstanding.

Accepted Answer

The aging schedule is indeed a categorization of accounts receivable based on the length of time they have been outstanding.

Question 9

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

Accepted Answer

Having accurate billing records and effective collection procedures can help a business ensure that customers pay on time, improving cash flow and reducing the risk of bad debt.

Question 10

The primary purposes of the Equal Credit Opportunity Act are to inform consumers about terms of a credit agreement and to require creditors to specify how finance charges are computed.

Accepted Answer

While informing consumers about credit terms is an important aspect of the Equal Credit Opportunity Act, its primary purposes are to prohibit credit discrimination based on certain protected characteristics (such as race, gender, and marital status) and to require creditors to provide information about credit decisions to consumers who are denied credit. Specification of finance charges is covered under the Truth in Lending Act.

Question 11

A comprehensive break-even analysis entails

Accepted Answer

A comprehensive break-even analysis involves examining the revenue-cost relationships and establishing sales forecasts to determine the level of sales needed to cover all costs and break even. This analysis considers fixed costs, variable costs, and contribution margins to estimate the amount of sales needed to cover costs at different levels of production or sales. Analyzing marketing strategies and using comparison pricing are additional steps that can be taken to refine the analysis, but they are not essential components of a comprehensive break-even analysis. Approximating debits, credits, costs, and sales may be part of the analysis, but it is not the central focus.

Question 12

Hollywood Amusement,a small independent movie theater,decreased the price of admission from $10 to $9.Prior to the price decrease,the business sold 1,000 tickets each month.After the price decrease,it experienced ticket sales of 1,500 a month.If the change in sales is attributable only to the change in price,Hollywood Amusement faces ____ for its movie tickets.

Accepted Answer

When the price decreased, there was a significant increase in the number of tickets sold. This indicates that the demand for the movie tickets is responsive to the change in price, which is a characteristic of elastic demand. Inelastic demand would have resulted in a smaller change in the quantity demanded despite the change in price.

Question 13

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

Accepted Answer

The total sales revenue is dependent on both the sales volume (quantity) of goods or services sold, and the price at which they are sold. Therefore, the correct choice is (D) sales volume and price. Credit terms and expenses may affect the profitability of the business, but they are not directly related to the total sales revenue.

Question 14

A business will not be successful unless it charges a price for its products that covers its total

Accepted Answer

In order for a business to be successful, it must charge a price for its products that covers its total cost and a margin of profit. This means that the price must not only cover the cost of goods and selling costs, but also fixed costs and overhead costs. Additionally, the price should ideally cover variable costs as well. Ultimately, the goal is to generate enough revenue to both cover costs and make a profit, which is why option A is the best choice.

Question 15

Beverly is systematically comparing various cost and revenue estimates in order to determine the acceptability of alternative prices.Beverly is using:

Accepted Answer

Beverly is comparing cost and revenue estimates in order to determine the break-even point, at which the company will neither make a profit nor a loss. This is an example of break-even analysis. Therefore, the best choice is A. Price lining refers to the practice of offering different prices for products in different categories, cost functioning is not a common term used in economics, and demand functioning refers to the analysis of how changes in price affect demand.

Question 16

The Consumer Credit Protection Act requires that the finance charge for credit be stated as an annual percentage rate and that creditors specify the procedures used for correcting billing mistakes.

Accepted Answer

The Consumer Credit Protection Act does indeed require that the finance charge for credit be stated as an annual percentage rate and that creditors specify the procedures used for correcting billing mistakes.

Question 17

Trade-credit agencies collect credit information on business firms and consumers in a given area.

Accepted Answer

The answer of Trade-credit agencies collect credit information on business...

Question 18

The difference between the unit selling price and the unit variable costs and expenses is known as the

Accepted Answer

The difference between the unit selling price and the unit variable costs and expenses is known as the contribution margin. This is the amount of money that can contribute towards covering the fixed costs and generating profit for the company. Therefore, choice C - contribution margin is the correct answer.

Question 19

Commissions paid to a salesperson would be included in

Accepted Answer

The answer of Commissions paid to a salesperson would be...

Question 20

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

Accepted Answer

Markup pricing is typically expressed as a percentage of the selling price, not the quantity, operating expenses, or estimated expenses. This is because the markup is added to the cost to arrive at the selling price.

Quiz 16: Pricing and Credit Decisions

Credit bureaus maintain credit histories on individuals based on information reported to them by banks,mortgage companies,department stores,and other creditors.

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

Active Feet,a small manufacturer of shoes,hired an additional vice-president and purchased a barrel of synthetic rubber used to make shoe soles.These two expenses should be considered a(n) and a(n) ,respectively.

In general,products that are consumed in fixed amounts have

Diamonds and other jewels often carry a high price to convey an image of high quality or uniqueness.This type of pricing is known as

The seller's measure of what he or she is willing to receive in exchange for transferring ownership or use of a product or service is

If the owner of Clarrisa's Fine Jewelry instructed the sales team to stress the uniqueness of the store's hand designed jewelry,a ____ pricing strategy would be expected.

The aging schedule is a categorization of accounts receivable based on the length of time they have been outstanding.

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

The primary purposes of the Equal Credit Opportunity Act are to inform consumers about terms of a credit agreement and to require creditors to specify how finance charges are computed.

A comprehensive break-even analysis entails

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

A business will not be successful unless it charges a price for its products that covers its total

Beverly is systematically comparing various cost and revenue estimates in order to determine the acceptability of alternative prices.Beverly is using:

The Consumer Credit Protection Act requires that the finance charge for credit be stated as an annual percentage rate and that creditors specify the procedures used for correcting billing mistakes.

Trade-credit agencies collect credit information on business firms and consumers in a given area.

The difference between the unit selling price and the unit variable costs and expenses is known as the

Commissions paid to a salesperson would be included in

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

Quiz 16: Pricing and Credit Decisions

Credit bureaus maintain credit histories on individuals based on information reported to them by banks,mortgage companies,department stores,and other creditors.

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

Active Feet,a small manufacturer of shoes,hired an additional vice-president and purchased a barrel of synthetic rubber used to make shoe soles.These two expenses should be considered a(n) ____ and a(n) ____,respectively.

In general,products that are consumed in fixed amounts have

Diamonds and other jewels often carry a high price to convey an image of high quality or uniqueness.This type of pricing is known as

The seller's measure of what he or she is willing to receive in exchange for transferring ownership or use of a product or service is

If the owner of Clarrisa's Fine Jewelry instructed the sales team to stress the uniqueness of the store's hand designed jewelry,a ____ pricing strategy would be expected.

The aging schedule is a categorization of accounts receivable based on the length of time they have been outstanding.

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

The primary purposes of the Equal Credit Opportunity Act are to inform consumers about terms of a credit agreement and to require creditors to specify how finance charges are computed.

A comprehensive break-even analysis entails

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

A business will not be successful unless it charges a price for its products that covers its total

Beverly is systematically comparing various cost and revenue estimates in order to determine the acceptability of alternative prices.Beverly is using:

The Consumer Credit Protection Act requires that the finance charge for credit be stated as an annual percentage rate and that creditors specify the procedures used for correcting billing mistakes.

Trade-credit agencies collect credit information on business firms and consumers in a given area.

The difference between the unit selling price and the unit variable costs and expenses is known as the

Commissions paid to a salesperson would be included in

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

Active Feet,a small manufacturer of shoes,hired an additional vice-president and purchased a barrel of synthetic rubber used to make shoe soles.These two expenses should be considered a(n) and a(n) ,respectively.