The Following Information Was Taken from Mitchell Company's Cash Budget

question 158

Multiple Choice

The following information was taken from Mitchell Company's cash budget for the month of July: $$\begin{array} { l r } \text { Beginning cash balance } & \$ 125,000 \\\text { Cash receipts } & 120,000 \\\text { Cash disbursements } & 170,000\end{array}$$ If the company has a policy of maintaining an end of the month cash balance of $125000 the amount the company would have to borrow is

• A)$50000.
• B)$25000.
• C)$75000.
• D)$36000.

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Definitions:

Consumption

The action or process of using goods and services for personal use or enjoyment within an economy.

APS

Acronym for Average Propensity to Save, which is the proportion of income which is saved, usually expressed as a percentage of total household income.

Disposable Income

The sum available for household consumption and saving after the reduction of income taxes.

Consumption

The total value of goods and services used by households and non-profit institutions serving households, excluding purchases of dwellings.