A Firm Has Just Ended Its Calendar Year Making a Sale

question 59

Multiple Choice

A firm has just ended its calendar year making a sale in the amount of $150,000 of merchandisepurchased during the year at a total cost of $112,500. Although the firm paid in full for themerchandise during the year, it has yet to collect at year end from the customer. The net profit and cash flow from this sale for the year are

• A) $37,500 and -$112,500 respectively.
• B) $150,000 and $112,500 respectively.
• C) $0 and $150,000 respectively.
• D) $37,500 and -$150,000 respectively.

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Definitions:

Business Borrowing

The act of obtaining funds from lenders or financial institutions by businesses to finance operations, growth, or investments.

Decreases the Money Supply

A monetary policy action that reduces the total amount of money available in the banking system, often aiming to control inflation.

Gross Domestic Product

The total value of all goods and services produced over a specific time period within a country's borders.

Allocative Efficiency

an optimal distribution of resources in an economy, ensuring that goods and services are distributed according to consumer preferences.