Business Math - Chapter 8 Review

A _____________ is the amount by which the retail price of a product is reduced by the manufacturer when it is sold to the reseller or customer.

• Cash Discount

• Trade Discount

• Net Price

• Trade Discount Rate

Original Price: $5,000

Discount rate: 10%

Net Price: ?

• $50

• $550

• $450

• $55

Original Price: $27,800

Discount rate: 35%

Discount: ?

• $97,300

• $7,930

• $9,730

• $18,070

The terms of sale 1/10, n/30 means that 1/10 or 10% of the invoice amount may be deducted if paid within 30 days.

• True
• False

Merchandise with a list price of $1,500.00 is purchased on account for $900.00 on August 1.Terms of sale are 2/10, n/30. Payment is made on August 17. The amount paid should be

• a. $1,500.00.
• b. $900.00.
• c. $600.00.
• d. $882.00.

A cash discount is offered to encourage prompt payment.

• True

• False

What is the single discount equivalent of a trade discount of 20/10?

• 30%

• 35%

• 27%

• 28%

An invoice dated March 25 with terms of 3/15 n/30 must be paid by what date?

• April 5

• April 9

• April 10

• April 15

An invoice dated November 2 for $2697 with terms 3/15 EOM was paid on November 14. How much was paid?

• $2612.81

• $2616.09

• $2668.11

• $2697

Tommy Bahama received an invoice dated July 27 from Surfing Services that shows a net price of $450 with the terms 2/10, n/30. Find the cash discount if paid by August 1.

• $9

• $45

• $441

• $450