Carson City Saloon Purchased a $25,000 Truck for Catering from Its

question 17

Short Answer

Carson City Saloon purchased a $25,000 truck for catering from its restaurant.It made a down payment of one-fourth of the price.What combination of amounts would affect the income statement and statement of cash flows for the purchase of the truck?
$\begin{array}{ll}\text { Income Statement }&\text { Cash Flow Statement }\\a.\$ 25,000 & \$ 0 \\b.\$ 0 & \$(25,000) \\c.\$ 25,000 & \$(6,250) \\d.\$ 0 & \$(6,250)\end{array}$

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Definitions:

Discounted Payback

A capital budgeting method that calculates the time required to break even on an investment based on the discounted cash flows.

Profitability Index

A financial tool used to assess the desirability of an investment by dividing the present value of future cash flows by the initial investment cost.

Economic Lives

The duration over which an asset is expected to be useful in generating revenue or other economic benefits.

Equivalent Annual Cost

The cost per year of owning and operating an asset over its entire lifespan, taking into account both the initial purchase price and the ongoing operating costs.