Following Is a List of Account Balances of Wilson Mowing

question 117

Multiple Choice

Following is a list of account balances of Wilson Mowing Services as of December 31 of the first year of operation:
$$\begin{array} { | l | r | } \hline \text { Accounts receivable } & \$ 5,000 \\\hline \text { Accounts payable } & 4,000 \\\hline \text { Salary expense } & 5,000 \\\hline \text { Repairs expense } & 1,000 \\\hline \text { Truck } & 10,000 \\\hline \text { Equipment } & 8,000 \\\hline \text { Notes payable } & 8,200 \\\hline \text { Cash } & 7,500 \\\hline \text { Supplies expense } & 1,600 \\\hline \text { Service revenue } & 32,000 \\\hline \text { Gasoline expense } & 3,800 \\\hline \text { Salary payable } & 200 \\\hline\end{array}$$ What is the amount of total liabilities at the end of the year?

• A)$12,400
• B)$24,100
• C)$21,200
• D)$12,200

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Definitions:

Payback Period

The time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.

Net Present Value

Net present value is a financial metric that calculates the present value of all cash flows associated with a project, including both inflows and outflows, to determine its profitability.

Time Value of Money

The notion that money’s worth is greater in the present than an equivalent sum in the future, attributed to its earning potential.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.