The most recent comparative balance sheet of Benefield Corporation appears below:
-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 source; The change in Inventory is a use
B) The change in Accounts Receivable is a source; The change in Inventory is a source
C) The change in Accounts Receivable is a use; The change in Inventory is a use
D) The change in Accounts Receivable is a use; The change in Inventory is a source

Question

The most recent comparative balance sheet of Benefield Corporation appears below: 
-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 source; The change in Inventory is a use 
B) The change in Accounts Receivable is a source; The change in Inventory is a source 
C) The change in Accounts Receivable is a use; The change in Inventory is a use 
D) The change in Accounts Receivable is a use; The change in Inventory is a source

Quizplus · Accepted Answer

An increase in Accounts Receivable is a use of cash because it represents sales made on credit, reducing cash flow. A decrease in Inventory is a source of cash as it indicates that inventory has been sold, increasing cash flow.

The Most Recent Comparative Balance Sheet of Benefield Corporation Appears