Stan Buys a 1966 Mustang, Which He Plans to Restore

question 164

Multiple Choice

Stan buys a 1966 Mustang, which he plans to restore and sell. He anticipates that the cost of the car and the repairs will be $15,000 and that he can sell it for $19,000. When he has spent $15,000, he discovers he needs to replace the engine, which will cost $4000. He can sell the car without the new engine for $9000. What should Stan do?

• A) He should complete the repairs and sell the car for $13,000.
• B) He should sell the car now for $9000.
• C) He should never try such an expensive project again.
• D) He should be totally indifferent between finishing the project and selling the car now.

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Definitions:

Outstanding Deposit

Any sum of money that has been transferred or sent for deposit into a bank account but has not yet been credited to the account.

Adjusted Cash Balance

The cash balance on financial statements after adjustments for checks in transit, deposits in transit, and other discrepancies.

Bank Statement

A monthly or quarterly document provided by a bank, detailing the account holder's transactions and balance.

Outstanding Deposit

Refers to funds that have been deposited but not yet credited to the depositor's account.