Which of the Following Is a TRUE Statement About Markups

question 252

Multiple Choice

Which of the following is a TRUE statement about markups?

• A) A firm can lose money even when using a high markup.
• B) Markup percents are computed as a percent of the cost of the product.
• C) It's easier for a producer to administer the prices consumers pay for products if the markup used varies from one intermediary to the next.
• D) The lower the markup, the lower the profit.
• E) None of these statements about markups is true.

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Definitions:

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the owners' claim on the business.

Cash Consideration

The amount of cash that is paid or received during transactions, such as acquisitions or sales of assets.

Outstanding Shares

The total number of shares of a corporation that have been issued and are held by shareholders, excluding treasury shares.

Contributed Surplus

An account on a company's balance sheet representing the excess amount investors pay over the par value of the company's shares.