Gemology Certification Financial Management & Budgeting 2

Question 1

A gem dealer purchases a parcel of sapphires for $8,400 and sells them for $14,700. What is the gross profit margin?

Accepted Answer

42.9%

Answer

Gross profit margin = (14,700 - 8,400) / 14,700 × 100 = 42.9%.

Question 2

Which financial document shows a gemology business's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

The balance sheet (statement of financial position) presents assets, liabilities, and owner's equity on a given date.

Question 3

A gemologist sets a retail price using a keystone markup on a $2,200 diamond. What is the retail price?

Accepted Answer

$4,400

Answer

Keystone markup doubles the wholesale cost, so $2,200 × 2 = $4,400.

Question 4

When calculating the true cost of gem inventory, which of the following should be included beyond the purchase price?

Accepted Answer

Freight, insurance, and import duties

Answer

Landed cost includes purchase price plus all freight, insurance, and import duties required to get inventory to your location.

Question 5

A jeweler's accounts receivable balance is $45,000 and annual credit sales are $270,000. What is the accounts receivable turnover ratio?

Accepted Answer

6.0

Answer

AR turnover = $270,000 / $45,000 = 6.0, meaning receivables are collected six times per year.

Gemology Certification Practice Test