Question

Which of the following are uses of cash?

a) Payment of dividends
b) Issuance of stock
c) Collection of accounts receivable
d) Purchase of inventory

Answer 1

Cash can be used for payment of dividends, collection of accounts receivable, and purchase of inventory, but not for the issuance of stock.

Step-by-step explanation:

The uses of cash include:

1. Payment of dividends: When a company distributes profits to its shareholders, it can pay dividends in cash.
2. Collection of accounts receivable: Cash is used to collect payments from customers who owe money to the company.
3. Purchase of inventory: Cash is needed to buy goods or materials for a company's operations.

On the other hand, the issuance of stock is not a use of cash. Issuing stock involves selling ownership shares of a company to the public, which does not involve the direct exchange of cash.