D to limit the amount of financial loss if there is an illness or injury
Answer:
Option (B) $5,000
Explanation:
Data provided in the question:
Repayment of Loan = $50,000
Interest = 8%
Cash flow Probability
$65,000 70%
$45,000 30%
Tax rate = 0%
Now,
Interest on loan = 8% of $50,000
= $4,000
Expected value of cash flow = ∑[cash flow × Probability ]
= ( 0.7 × $65,000 ) + ( 0.3 × $45,000 )
= $45,500 + $13,500
= $59,000
The owner's expected cash flow after debt service
= Expected value of cash flow - Interest on loan - Repayment of Loan
= $59,000 - $4,000 - $50,000
= $5,000
Hence,
Option (B) $5,000
Answer:
D- income statement accounts are temporary accounts and do not retain their balances from one period to the next.
Explanation:
quizlet
<h3>
Answer :</h3>
<em>Less than</em>
(If a business has a negative cash flow, the revenue must be less than operating expenses.)
Answer:
Cash flow provided from operating activities 12,700
Explanation:
Net Income: 10,500
Depreciation expense 5,500 a
Adjusted income 16,000
Change in working capital
↓Account Receivable 3,500 b
↑Inventory (7,500) c
↑Salaries payable 700 d
Total Change in working capital (3,300)
Cash flow provided from operating activities 12,700
<u>Notes:</u>
a The depreciation is a non-monetary concept it has no impact in cash. It is removed.
b The decrease the AR means cash was collected, therefore the cash increase
c The increase in inventory represents cash being used to purchase that inventory. Cash decreased
d the salaries payable represent the delay of cash disbursement, it increases cash.
