An Appliance Store Sells a TV for $1,200 and Gives

question 53

Multiple Choice

An appliance store sells a TV for $1,200 and gives their customers a full three years to pay for the TV. If interest rates are 5 percent, what is the equivalent sales price of the TV when the customer takes the full 3 years to pay for it?

• A) $991.72
• B) $1,036.61
• C) $1,104.14
• D) $1,389.15

---

Definitions:

Endowment Contribution

A donation made to an organization with the stipulation that the funds are to be invested and the principal remained intact.

Restricted Fund Method

An accounting principle that mandates funds designated for a specific purpose by a donor must be tracked and reported separately from general funds.

Deferred Revenue

Revenue received by a company for goods or services to be delivered in the future, recognized as a liability until the service or product is provided.

Pledges Receivable

Amounts promised to an organization by donors that are recognized as assets before the cash is actually received.