At the End of Its First Month of Operations, Michael's

question 179

Multiple Choice

At the end of its first month of operations, Michael's Consulting Services reported net income of $25,000. They also had account balances of:
Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The owner's total investment for this first month was $5,000. There were no owner withdrawals in the first month.
Calculate the ending balance in the Owner's Capital account to be reported on the Statement of Owner's Equity.

• A) $20,000
• B) $7,000
• C) $30,000
• D) $5,000
• E) $25,000

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Definitions:

Cash Flow Scenarios

Different projections or models of how cash will enter and leave a business, often used in planning and forecasting financial health.

Project's NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment or project, calculated by discounting the expected cash flows to their present value and subtracting the initial investment.

Decision Tree Analysis

A tool used in decision making to visually map out possible outcomes of a decision, factoring in probabilities and costs or benefits.

NPV Distribution

Refers to the distribution of net present values across different potential investments or projects.