A firm has just ended its 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 is yet to collect at year end from the customer. The possible problem this firm may face is ________.
A) high taxes
B) lack of cash flow
C) inability to receive credit
D) high leverage

Question

Quizplus · Accepted Answer

The firm may face a lack of cash flow because even though they made a sale, they have not received payment from the customer yet. This can create a gap in their cash resources, making it difficult for them to meet their financial obligations.

A Firm Has Just Ended Its Calendar Year Making a Sale