A Firm Has the Following Account Balances for This Year

question 11

Multiple Choice

A firm has the following account balances for this year. Sales for the year are $600,000. Projected sales for next year are $642,000. The percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except long-term debt and common stock, change according to that approach. The firm plans to decrease the long-term debt balance by $5,000 next year. Retained earnings is expected to increase by $3,500 next year. What is the projected external financing need?

• A) $10,520
• B) $13,120
• C) $18,520
• D) $20,720
• E) $25,620

Recognize how the direct and indirect methods for cash flows from operating activities are applied.

Identify the role of spreadsheets in preparing financial statements.

Analyze the effects of asset purchases, sales, and depreciation on cash flows.

Understand the importance of conflict resolution in managerial roles.

---

Definitions:

Warfarin (Coumadin)

A medication commonly used to prevent blood clots by inhibiting the body's ability to form blood clots.

Hypertension

A medical condition characterized by persistently high blood pressure, which can lead to serious health issues like heart disease and stroke.

Bleeding

The loss of blood from the circulatory system, which can occur internally or externally due to various causes such as injury, surgical procedures, or medical conditions.

Flu Vaccine

A vaccination that provides protection against the influenza virus, recommended annually to prevent flu-related illnesses.