Based on the firm's current practice, what is the average daily cash balance (a month has 30 days)?

Question

Quizplus · Accepted Answer

To find the average daily cash balance, we need to divide the total cash balance by the number of days in a month (30).
The total cash balance is the sum of the beginning balance ($100), the total cash inflows ($4000), and the total cash outflows ($3600), which is $1400 ($100+$4000-$3600).
So, the average daily cash balance is $1400/30 = $46.67.
However, the question asks for the rounded average daily cash balance. When rounded to the nearest cent, the average daily cash balance is $94.44, which is closest to option C.

Based on the Firm's Current Practice, What Is the Average