An increase in a liability account represents a source of funds on the cash flow statement.

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An increase in a liability account on the balance sheet represents an increase in the amount of funds that a company owes to others, which can result in a decrease in cash flow. However, it can also represent a source of funds if the company is able to borrow at favorable terms or negotiate more favorable payment terms with its suppliers. Therefore, an increase in a liability account can be either a source or use of cash, depending on the circumstances.

An Increase in a Liability Account Represents a Source of Funds