Peerless believes that its sales next year will increase 20 percent from the current level of $800,000. Management calculates that assets must increase $110,000 to support the new sales level, and current liabilities will increase $70,000. What total financing will be needed?
A) $40,000
B) $1,600
C) $33,600
D) $8,000

Question

Quizplus · Accepted Answer

The total financing needed is the increase in assets ($110,000) minus the increase in current liabilities ($70,000), which equals $40,000.

Peerless Believes That Its Sales Next Year Will Increase 20