A3+ Has Prepared Its 3rd Quarter Budget and Provided the Following

question 94

Multiple Choice

A3+ has prepared its 3rd quarter budget and provided the following data: The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. How much will the company have to borrow at the end of August?

• A)$15,000
• B)$5,000
• C)$10,000
• D)$20,000

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Definitions:

Accounting Abuses

refers to the manipulation or misrepresentation of financial records and reports to conceal the actual financial condition or performance of an entity.

Overcharging Clients

The unethical practice of charging clients more than is fair or initially agreed upon for services or goods.

Fee-splitting

The practice of dividing professional fees for services with someone who referred a client or patient, often seen in the medical field.

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.