Which One of the Following Changes Describes the Payment of $900

question 18

Multiple Choice

Which one of the following changes describes the payment of $900 for utilities for the current month?

• A)Assets and shareholders' equity decrease by $900.
• B)Assets and shareholders' equity don't change.
• C)Assets and liabilities increase by $900.
• D)Assets and liabilities decrease by $900.

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Definitions:

Collection Float

The time period between when a payment is initiated by a debtor and when the funds are actually available to the creditor.

Transaction Motive

Refers to the need to hold cash for the purpose of conducting daily business transactions and operations.

Lockbox System

A service provided by banks to process payments by collecting and depositing checks into the company's account quickly.

NPV

Net Present Value (NPV) is a method used in capital budgeting to determine the value of an investment by calculating the present value of expected future cash flows using a specific discount rate.