If the opening cash balance at the beginning of the month is $27,500, total cash inflows for the month are $38,000 and total cash outflows are $98,000 the opening cash balance at the beginning of the next month is:

Question

Quizplus · Accepted Answer

To calculate the closing cash balance, we need to subtract the total cash outflows from the sum of opening cash and total cash inflows:

Closing cash balance = Opening cash balance + Total cash inflows – Total cash outflows
Closing cash balance = $27,500 + $38,000 - $98,000
Closing cash balance = $-32,500

Since the result is negative, it indicates a cash deficit at the end of the month, meaning that the company has spent more cash than it had available. Therefore, the correct choice is C, $32,500 (deficit).

If the Opening Cash Balance at the Beginning of the Month