A Florist Is Buying a Number of Motorcycles to Expand

question 115

Multiple Choice

A florist is buying a number of motorcycles to expand its delivery service.These will cost $87,000,but are expected to increase profits by $3000 per month over the next four years.What is the payback period in this case?

• A)12 months
• B)18 months
• C)24 months
• D)29 months

---

Definitions:

Income Summary Account

An income summary account is an account used in the closing process that temporarily holds the balances of all income and expense accounts before transferring the net result to capital or retained earnings.

Net Loss

The amount by which company expenses exceed its revenues over a specified period, indicating a loss in financial performance.

Post-Closing Trial Balance

A list of all accounts still open after closing entries are made, used to ensure that debits equal credits.

Capital

The wealth in the form of money or other assets owned by a person or organization, or available for a purpose such as starting a company or investing.