A Firm Has Projected Sales in May, June, and July

question 23

Multiple Choice

A firm has projected sales in May, June, and July of €100, €200, and €300, respectively. The firm makes 20 percent of sales for cash and collects the balance one month following the sale. The firm's total cash receipts in July

• A) cannot be determined with the information provided.
• B) are €180.
• C) are €200.
• D) are €220.

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest.

Operating Expenses

Costs incurred in the normal operations of a business, such as rent, utilities, and payroll.

Net Income

The conclusive financial gain of a company after expenses and taxes have been removed from the initial total revenue.

Merchandising Company

A type of business that purchases goods in a finished condition for resale without further processing.