Question

Which one of the following is a source of cash?

a. acquisition of debt
b. purchase of inventory
c. granting credit to a customer
d. payment to a supplier
e. repurchase of common stock

Answer 1

Answer: d. Payment to a supplier

Explanation:

Option "a" is an acquisition of debt, which is not a source of cash.

Option "b" is purchase of inventory, which is not a source of cash, but uses cash.

Option "c" is granting credit to a customer, which is not a source of cash, but uses cash.

Option "e" is repurchase of common stock, which is not a source of cash, but uses cash.

Option "d" is payment to a supplier, which is a source of cash.