Spettel Corporation's comparative balance sheet appears below: The company's net income (loss) for the year was $11,000 and its cash dividends were $2,000.
-Which of the following classifications of changes in balance sheet accounts as sources and uses is correct?
A) The change in Accounts Receivable is a use; The change in Inventory is a use
B) The change in Accounts Receivable is a use; The change in Inventory is a source
C) The change in Accounts Receivable is a source; The change in Inventory is a source
D) The change in Accounts Receivable is a source; The change in Inventory is a use

Question

Spettel Corporation's comparative balance sheet appears below:  The company's net income (loss) for the year was $11,000 and its cash dividends were $2,000.
-Which of the following classifications of changes in balance sheet accounts as sources and uses is correct?
A) The change in Accounts Receivable is a use; The change in Inventory is a use 
B) The change in Accounts Receivable is a use; The change in Inventory is a source 
C) The change in Accounts Receivable is a source; The change in Inventory is a source 
D) The change in Accounts Receivable is a source; The change in Inventory is a use

Quizplus · Accepted Answer

The change in Accounts Receivable is a use because it represents an outflow of cash, while the change in Inventory is a source because it represents an inflow of cash.

Spettel Corporation's Comparative Balance Sheet Appears Below: the Company's