What is the formula for determining ending cash balance?

What is the formula for determining ending cash balance?

• A. Ending cash balance = Total cash - Total costs
• B. Ending cash balance = Total cash x Total costs
• C. Ending cash balance = Total cash + Total costs
• D. Ending cash balance = Total cash / Total costs

Answer: (A)

Ending cash balance shows how much cash you have left after paying expenses. You figure it by taking the total cash you have and subtracting the total costs. So the correct formula is ending cash balance = total cash minus total costs. The other operations don’t reflect cash remaining: multiplying or dividing would distort the amount, and adding would treat costs as if they increased cash. For example, with total cash of 10,000 and total costs of 3,200, the ending cash balance would be 6,800.

Ending cash balance shows how much cash you have left after paying expenses. You figure it by taking the total cash you have and subtracting the total costs. So the correct formula is ending cash balance = total cash minus total costs. The other operations don’t reflect cash remaining: multiplying or dividing would distort the amount, and adding would treat costs as if they increased cash. For example, with total cash of 10,000 and total costs of 3,200, the ending cash balance would be 6,800.