During the Year, Al's Tools Decreased Its Accounts Receivable by $160

question 32

Multiple Choice

During the year, Al's Tools decreased its accounts receivable by $160, increased its inventory by $115, and decreased its accounts payable by $70. How did these three accounts affect the sources of uses of cash by the firm?

• A) Net source of cash of $120
• B) Net source of cash of $205
• C) Net source of cash of $45
• D) Net use of cash of $115
• E) Net use of cash of $25

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Definitions:

Credit Sales

Sales made on credit, where the payment is received after the delivery of goods or services.

Cash Budget

A forecast of cash inflows and outflows over a specific period, used to manage the company's cash flow and ensure financial stability.

Cash Disbursements

Financial transactions involving the outflow of cash, typically from an entity to vendors or employees, for expenses or purchases.

Beginning Cash Balance

The Beginning Cash Balance is the amount of cash that a company has at the start of a new accounting period, carried over from the end of the previous period.