Rhine Company Sets Price Equal to Cost Plus 40

question 136

Multiple Choice

Rhine Company sets price equal to cost plus 40%.Recently, Rhine charged a customer a price of $280 for an item.What was the cost of the item to Rhine?

• A) $120
• B) $185
• C) $200
• D) $340
• E) $580

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Definitions:

Liability Account

An accounting record that captures obligations or debts a company owes to others, which are expected to be paid in the future.

Expense Account

An account where businesses track costs incurred during operations, often related to employees' business-related expenses.

Chart of Accounts

The Chart of Accounts is a systematic list of all accounts used by an organization, essential for classifying and organizing financial transactions within the general ledger.

Expense Account

An account where costs associated with the operations of a business, such as rent, utilities, and salaries, are recorded.