A firm has just ended the calendar year making a sale in the amount of $200,000 of merchandise purchased during the year at a total cost of $150,500. Although the firm paid in full for the merchandise during the year, it has yet to collect at year end from the customer. One possible problem this firm may face is

Question

Quizplus · Accepted Answer

The firm may face insolvency issues because it has already paid for the merchandise but has not yet collected the cash from the sale, potentially leading to cash flow problems.

A Firm Has Just Ended the Calendar Year Making a Sale