Ironhorse Tools Has Used $700,000 from Its Total Annual Earnings

question 45

Multiple Choice

Ironhorse Tools has used $700,000 from its total annual earnings of $1,650,000 to invest in upgrading its manufacturing facilities. Its accounts receivable from customers is estimated to be $130,000 and accounts payable $75,000. In monetary terms, what would Ironhorse's resource flows be?

• A) $1,650,000
• B) $130,000
• C) $75,000
• D) $700,000

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Definitions:

Realizable Value

The estimated amount that an entity can receive from the disposal of an asset, after deducting the costs associated with the disposal.

Maturity Value

Maturity value is the amount to be received by an investor at the maturity date of a financial instrument, often including principal and interest.

Allowance Method

A bookkeeping approach involving the estimation of non-recoverable debts by anticipating uncollectible accounts at the close of every period.

Uncollectible Receivables

Accounts receivable that cannot be collected from customers, often written off as a bad debt expense.