The Following Information Is Available for Royal Corp Assuming That All Purchases Are Made on Account, Accounts Payable

question 6

Multiple Choice

The following information is available for Royal Corp. for 2020: $\begin{array}{llcc} \text {Accounts payable, beginning............................................................ } &\$14,000 \\ \text {Cash payments on account during year............................................. } &7,000\\ \text {Purchase discounts taken during year on 2020 purchases ................ } &1,200\\ \text { Purchases....................................................................................... } &10,000\\\end{array}$
Assuming that all purchases are made on account, accounts payable at the end of the year are

• A) $17,000
• B) $22,800
• C) $15,800
• D) $24,000

---

Definitions:

Cumulative Return

The aggregate amount that an investment has gained or lost over time, regardless of the period of time involved.

Initial Margin

The upfront payment required when purchasing securities on margin, serving as a deposit to cover credit risk for the broker.

Maintenance Margin

The minimum account balance that must be maintained by an investor in a margin account after purchasing securities on margin.

Stock-index Futures

Futures contracts that use a stock index as the underlying asset, allowing investors to speculate on the future value of the index.