Analysis of the changes in all of the noncash balance sheet accounts will explain the change in the Cash account.

Question

Quizplus · Accepted Answer

Since noncash balance sheet accounts include accounts receivable, inventory, fixed assets, and accounts payable, changes in these accounts can affect the Cash account. For example, an increase in accounts receivable or inventory would suggest that cash has been tied up in these accounts, whereas a decrease in accounts payable would suggest that cash has been used to pay off debts. Analyzing the changes in all noncash balance sheet accounts would give a comprehensive understanding of the impact on the Cash account.

Analysis of the Changes in All of the Noncash Balance