Ace the CMA 2025 Challenge – Unlock Your Accounting Superpowers!

Usable funds refer to the actual amount of money that is available for a company to use after accounting for discounts on invoices. In this context, calculating usable funds involves determining the amount of cash that will be generated from sales after any agreed-upon discounts have been applied.

The formula of invoice amount multiplied by (1.0 - discount percentage) correctly reflects this calculation. The invoice amount represents the total charge for goods or services before any discounts are deducted. By applying the discount rate to the invoice amount, you effectively reduce the total amount expected to be collected. This adjustment ensures that the calculation captures the real cash flow that can be utilized, as it reflects the anticipated revenue after discounts, which directly impacts liquidity.

The other options do not apply to the calculation of usable funds. For instance, sales amount does not necessarily account for collected invoices, and calculating total revenue with tax implications does not consider discounts that may affect cash flow. Similarly, using a loan amount adjusted by interest would relate more to financing considerations than to usable funds from sales activity. Thus, the focus on invoice amounts along with discount percentages is key in determining the actual usable funds for a business.