newconnect.mheducation.com Exam 1 Saved Help Save & Exit Sbmit You are given the

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newconnect.mheducation.com Exam 1 Saved Help Save & Exit Sbmit You are given the following information for Thrice Corp 9 Decrease in inventory Decrease in accounts payable Increase in notes payable Increase in accounts receivable $560 230 215 245 00:48:55 Did cash go up or down? By how much? Cash by Classify each event as a source or use of cash. A decrease in inventory is a A decrease in accounts payable is a An increase in notes payable is a An increase in accounts receivable is a source of cash use of cash source of cash use of cash Mc Graw Hill Prev9 of 10Next>

Explanation / Answer

Decrease in inventory - Source of Cash

Decrease in inventory implies that inventory has been sold. Hence company will receive cash in return.

Decrease in accounts payable is - Use of Cash

This implies company has paid its accounts payables or liabilities and hence used cash.

Increase in notes payable - Source of cash

Company has borrowed money using notes payable. Hence the lender will give cash to company.

Increase in accounts receivable - Use of cash

Company has done most of the sales in credit and hence has not received not much of cash, hence it is use of cash.

Now, solving numerical:

Change in cash = Source of cash (incoming cash) - Use of Cash (outflow of cash)

Change in cash = (560 + 215) - (230 + 245) = 300

More cash is coming in. So cash balance will INCREASE by $300

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