How would a $15,000 decrease in AR and a $8,000 increase in inventory affect cash?

A) $15,000 source; $8,000 use
B) $15,000 use; $8,000 source
C) $7,000 use
D) $23,000 use
E) $23,000 source

Question

How would a $15,000 decrease in AR and a $8,000 increase in inventory affect cash?A)  $15,000 source; $8,000 useB)  $15,000 use; $8,000 sourceC)  $7,000 useD)  $23,000 useE)  $23,000 source

Belle Apuan · Accepted Answer

Final Answer : A, Explanation :  A decrease in accounts receivable (AR) means that cash is collected, which is a source of cash. An increase in inventory means cash is used to purchase more inventory, which is a use of cash.

How would a $15,000 decrease in AR and a $8,000 increase in inventory affect cash?

A) $15,000 source; $8,000 use
B) $15,000 use; $8,000 source
C) $7,000 use
D) $23,000 use
E) $23,000 source

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