McGlothin Inc $\begin{array} { l c c c c } \text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & - \$ 1,150 & \$ 500 & \$ 500 & \$ 500\end{array}$

question 102

Multiple Choice

McGlothin Inc. is considering a project that has the following cash flow data. What is the project's payback?
$\begin{array} { l c c c c } \text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & - \$ 1,150 & \$ 500 & \$ 500 & \$ 500\end{array}$

• A) 1.86 years
• B) 2.07 years
• C) 2.30 years
• D) 2.53 years
• E) 2.78 years

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Definitions:

Cash Overage

A situation where the amount of cash on hand is greater than the expected amount, often due to errors in cash management or recording.

Internal Control System

A process implemented by management and other personnel to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations.

Purpose

The reason for which something is done or created, or for which something exists.

Voucher System

An accounting system that involves preparing and approving vouchers before transactions are recorded and payments made, to ensure financial controls.