During the year, The Train Stop decreased its accounts receivable by $60, increased its inventory by $130, and decreased its accounts payable by $20. For these three accounts, the ﬁrm has a net:
A) $90 use of cash.
B) $50 use of cash.
C) $170 use of cash.
D) $90 source of cash.
E) $50 source of cash.

Question

Quizplus · Accepted Answer

Decreasing accounts receivable by $60 is a source of cash, increasing inventory by $130 is a use of cash, and decreasing accounts payable by $20 is a use of cash. The net effect is a $90 use of cash ($130 + $20 - $60 = $90).

During the Year, the Train Stop Decreased Its Accounts Receivable