Which Is the Best Explanation for This Journal Entry

question 181

Multiple Choice

Which is the best explanation for this journal entry?

• A) Purchased equipment, paid cash of $5,000, with the remainder to be paid in the future.
• B) Purchased equipment, paid cash of $10,000, with the remainder to be received in the future.
• C) Purchased equipment, paid cash for the entire amount.
• D) Purchased equipment on credit.

---

Definitions:

Cash Break-Even

Cash break-even is the point at which a business's cash receipts equal its cash expenses, indicating the minimum amount of sales needed to cover all cash outflows without considering any profit.

Operating Cash Flow

A measure of the cash generated by a company's normal business operations over a specific period.

Sales Level

The total volume or number of units sold or services rendered over a specific period.

Operating Cash Flow

The cash generated from the normal operations of a business, excluding capital expenditures and investment revenue.