Question

You are given the following information for Thrice Corp.:

   

Decrease in inventory	$	550
Decrease in accounts payable		225
Increase in notes payable		210
Increase in accounts receivable		240

  

1) Did cash go up or down? By how much?

2) Classify each event as a source or use of cash.

Answer 1

Sol. Calculation of Cash effect from following transactions

	Particulars	Amount	Remarks
	Decrease in inventory	550	Source of cash - It indicates as excess sales so more cash will be generated
Less:	Decrease in accounts payable	(225)	Use of cash - As the payment has been made to accounts payable
Add:	Increase in notes payable	210	Source of cash - As payment hasn't been made so avoidance of outflow is inflow
Less:	Increase in accounts receivable	(240)	Use of cash - As more amount got stuck with debtors so avoidance of inflow is outflow
	Net cash generated/(used)	295