The conversion of current assets from inventory to receivables to cash provides the___________ of cash used to pay the current liabilities, which represents a(n)___________ of cash.
A) source, use
B) inflow, outflow
C) outflow, inflow
D) use, source

Question

Quizplus · Accepted Answer

The conversion of inventory to receivables to cash represents a source of cash because it increases the cash on hand of a company. Therefore, options B and C can be eliminated. Option D is incorrect because it suggests that this conversion represents a use of cash, which is not the case.

The Conversion of Current Assets from Inventory to Receivables to Cash