Question

Which one of the following is a use of cash?

1) Decrease in accounts receivables
2) Decrease in fixed assets
3) Decrease in accounts payable
4) Decrease in inventory
5) Increase in long-term debt

Answer 1

The use of cash is to decrease accounts payable. When a company pays off its accounts payable, it is using cash to settle its obligations.

Step-by-step explanation:

The use of cash is to decrease accounts payable. Accounts payable represents the amount of money a company owes to its suppliers or creditors for goods or services received but not yet paid for. When a company pays off its accounts payable, it is using cash to settle its obligations.

For example, let's say a company had an accounts payable balance of $1,000. When the company pays off this balance, it will decrease its accounts payable by $1,000 and decrease its cash by the same amount.

Therefore, the correct answer to the question is option 3) Decrease in accounts payable.