What percentage of the purchase price was paid in cash in the example?

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Enhance your accounting skills for the PSIA Accounting Exam. Use flashcards and multiple-choice questions to prepare effectively with hints and explanations. Get set for your exam success!

Multiple Choice

What percentage of the purchase price was paid in cash in the example?

Explanation:
Understanding cash versus financed portions of a purchase: the percentage paid in cash is the cash down payment divided by the total price. In the example, the buyer contributes half of the purchase price as cash, with the remaining half financed or paid later. Therefore the cash portion is fifty percent. If the cash portion were smaller, more of the price would be financed; if it were larger, more would be paid upfront; if it were all cash, nothing would be financed.

Understanding cash versus financed portions of a purchase: the percentage paid in cash is the cash down payment divided by the total price. In the example, the buyer contributes half of the purchase price as cash, with the remaining half financed or paid later. Therefore the cash portion is fifty percent. If the cash portion were smaller, more of the price would be financed; if it were larger, more would be paid upfront; if it were all cash, nothing would be financed.

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