Which of the following is considered a use of cash in a cash flow statement?
A)Increase in accrued wages
B)Increase in common stock
C)Decrease in accounts receivable
D)Decrease in inventory
E)Increase in fixed assets

Question

Quizplus · Accepted Answer

An increase in fixed assets would typically involve the use of cash, as it involves investing in long-term assets that will generate future benefit for the company.

Note: The other options listed do not involve the use of cash.  An increase in accrued wages represents an increase in liabilities, which is a non-cash item. An increase in common stock represents financing from investors, which is also non-cash. A decrease in accounts receivable and inventory represents a conversion of current assets into cash, which is a source of cash rather than a use of cash.

Which of the Following Is Considered a Use of Cash