Cambridge Cleaners Started Business on January 1 and Immediately Purchased

question 61

Multiple Choice

Cambridge Cleaners started business on January 1 and immediately purchased $5,000 of supplies to use in the business.At the end of the month,30% of the supplies remain unpaid and 20% are still on hand.What amounts should appear as an expense on the financial statements for January?

• A) income statement: $4,000; statement of cash flows: $1,500
• B) income statement: $4,000; statement of cash flows: $3,500
• C) income statement: $5,000; statement of cash flows: $3,500
• D) income statement: $5,000; statement of cash flows: $5,000

---

Definitions:

Future Values

The value of an asset or amount of money at a specified date in the future that is equivalent in value to a specified sum today.

Present Values

The process of determining the present worth of an amount or series of cash flows that will be received or paid in the future, using a specific discount rate.

Annuity Payment

A fixed sum of money paid to someone each period, typically for the rest of their life or for a fixed number of years.

Insurance Proceeds

The payment received by an insured party from an insurance company in the event of a claim.