A $120,000, 5%, 200-Day Note Dated June 6, Is Discounted

question 51

Multiple Choice

A $120,000, 5%, 200-day note dated June 6, is discounted on October 8. The discount period is:

• A)124 days
• B)76 days
• C)142 days
• D)67 days
• E)None of these

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Definitions:

Cost Variance

The difference between the expected (budgeted) cost and the actual cost incurred.

Actual Costs

The real, observed expenditures incurred as opposed to estimated or standard costs.

Standard Costs

Predetermined or estimated costs of manufacturing, selling, and administrative activities, used for budgeting and assessing performance.

Rate Variance

The difference between an expected or standard cost and the actual cost incurred, often used in budgeting and financial analysis to gauge performance.