If ending cash balance is $12,500 and total cash receipts are $35,000 while cash payments total $28,000, what is the net increase in cash during the period?

• A. 28,000
• B. 7,000
• C. 12,000
• D. 35,000

Answer: (B)

Cash increases during a period by the amount of cash received minus cash paid out. Here, receipts are 35,000 and payments are 28,000, so the net increase in cash is 35,000 − 28,000 = 7,000. This aligns with ending cash of 12,500 (beginning cash would have been 5,500, since 5,500 + 7,000 = 12,500), confirming the calculation.