Which of the below is a USE of cash?
A) Credit Sales
B) Retirement of debt (paying off loans and bonds)
C) Bank loans
D) Cash sales of equipment or other assets of the company
Answer: B
Explanation: B) The sources of cash (cash receipts or cash inflow) are: cash sales; payments received on accounts receivables (mainly credit sales); cash sales of equipment or other assets of the company, and funding sources (bank loans, bond sales, and stock sales). The uses of cash (cash expenditures or cash outflow) are: cash purchases (supplies, inventories, etc.); payments made on accounts payable (to suppliers); wages and salaries; rent, lease, or mortgage payments; utility payments (water, electricity, phones, etc.); shipping costs; interest payments; dividend payments; retirement of debt (paying off loans and bonds); and repurchases of stock.
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