(CMA Adapted, Dec 87 #1) When a Balance Sheet Amount

question 83

Multiple Choice

(CMA adapted, Dec 87 #1) When a balance sheet amount is related to an income statement amount in computing a ratio,

• A)the balance sheet amount should be converted to an average for the year.
• B)the income statement amount should be converted to an average for the year.
• C)both amounts should be converted to market value.
• D)the ratio loses its historical perspective because a beginning-of-the-year amount is combined with an end-of-the-year amount.
• E)none of the above.

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Definitions:

Cash Receipts

The total amount of cash collected by a business within a specific period, including revenues from sales, loan proceeds, interest income, and other sources.

Cash Payments

Cash payments refer to transactions where the payment for goods, services, or obligations is made using physical currency or through digital means equivalent to cash.

Bank Statement

A bank statement is a summary of all transactions in an account, provided by the bank to the account holder, usually on a monthly basis.

Adjusted Cash Balance

The cash amount reported in financial statements, adjusted for outstanding checks and deposits in transit, to reflect the actual available cash.