Question
In: Finance
Which of the following statements is most correct?
Which of the following statements is most correct?
A. Decrease in accounts payable is a use of cash.
B. Increase in long-term debt is a use of cash.
C. Increase in inventory is a source of cash
D. Decrease in notes payable is a source of cash
E. Increase in accounts receivable is a source of cash
Solutions
Expert Solution
When cash is reduced, it is called use of cash.
A: decrease in accounts payable is a use of cash. : Correct one : (Thumbs up please)
Because when we make payment, cash balance will reduce, and so it is a use of cash.
other options are wrong:
increase in long term debt is a source as cash is received
Increase in Inventory is a use as cash is used to purchase inventory
Decrease in notes payable is a source as cash is paid
Increase in Accounts receivable is a use as goods sold from inventory used so cash has decreased
jeff jeffy answered 2 years agoRelated Solutions
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