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 1 year ago

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