Whose Cash Flow Is Best Described by the Timeline Shown

question 35

Multiple Choice

Whose cash flow is best described by the timeline shown below?

• A) Joe, who puts down $3,500 to buy a car, and then makes annual payments of $1,000
• B) Harry, who borrows $3,500, and then receives an annual payment of $1,000
• C) Karen, who loans a friend $3,500, which friend then pays back the loan in four annual installments of $1,000
• D) Leo, who borrows $3,500, and then pays back the loan in four annual payments of $1,000

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Definitions:

Allowance for Doubtful Accounts

A contra asset account used to estimate the portion of a company's accounts receivable that may not be collectible.

Retail Company

A business entity that sells goods directly to consumers, typically through various channels such as physical stores or online platforms.

Finished Goods

Products that have completed the manufacturing process and are ready for sale to customers.

Work in Process

Inventory that includes goods in production but not yet completed, a stage between raw materials and finished goods.