1. A firm grants credit with terms of 2/10, net 40. The firm's customers have ___ days to pay in order to receive a _____ percent discount.

a. 2; 10

b. 10; 40

c. 40; 2

d. 40; 10

e. 10; 2

2. On May 11, you purchased $3,700 of merchandise from a supplier. The terms of the sale were 1/5, net 15. The discounted amount due is _____ which is payable no later than _____.

a. $3,663; May 26

b. $3,515; May 16

c. $2,960; May 16

d. $3,515; May 26

e. $3,663; May 16

3. Which one of the following is the need to hold cash simply as a financial reserve?

a. Activity motive

b. Opportunistic motive

c. Precautionary motive

d. Speculative motive

e. Transaction motive

4. Which one of the following would tend to create an unexpected increase in a firm's account's receivable period?

a. Increased credit sales

b. Increased collection efforts

c. Increased dollar value per each sale

d. Increased customer delinquencies

e. The implementation of a cash discount

5. Fischer's Furniture sells 2,400 sofas a year at an average price per sofa of $1,250. The carrying cost per unit is $11.60. The company orders 80 sofas at a time and has a fixed order cost of $52 per order. The sofas are sold out before they are restocked. What is the economic order quantity?

a. 162 sofas

b. 171 sofas

c. 188 sofas

d. 211 sofas

e. 147 sofas