ABC Corporation Began Operations on January 1st of This Year

question 107

Multiple Choice

ABC Corporation began operations on January 1st of this year with a cash balance of $250,000.ABC had sales of $200,000 for the month of January,all on credit.ABC allows its customers 30 days to pay.ABC's expenses for January equal $150,000,and ABC's ending balance in accounts payable at January 31st is $50,000.In its cash budget for January,ABC's ending cash balance should be equal to

• A) $300,000 because of GAAP accrual accounting rules.
• B) $150,000.
• C) $200,000.
• D) $100,000.

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Definitions:

Compounded Semi-annually

Interest calculation method where interest is added to the principal twice a year, allowing the interest to grow faster than simple interest.

Savings Plan

A systematic approach to setting aside funds to reach financial goals.

Investments

Funds committed into various financial instruments or assets with the expectation of generating income or profit.

Compounded Monthly

Interest that is calculated on the principal and the accumulated interest every month.