A source of cash can be deﬁned as any activity that:
A) Increases the current assets of a ﬁrm.
B) Increases the cash reserves of a ﬁrm.
C) Involves accounts receivable or inventory.
D) Involves the sale or return of merchandise by a customer.
E) Involves the spending of cash.

Question

Quizplus · Accepted Answer

A source of cash is an activity that increases a firm's cash reserves, which is the definition given in choice B. The other choices involve various transactions that may or may not result in an increase in cash, but are not sufficient to define a source of cash on their own.

A Source of Cash Can Be Deﬁned as Any Activity