Question

What is the overall change in cash resulting from: $300 increase in inventories, $150 increase in accounts payable, $120 decrease in accounts receivable, $60 decrease in other current assets, $150 decrease in other current liabilities?

(A) -$120
(B) -$240
(C) $180
(D) $120

Answer 1

(A). - $ 120

Step-by-step explanation:

The changes to cash are from the following rules

Increase in assets and decrease in liabilities is a decrease in cash

Decrease in assets and increase in liabilities is and increase in cash

Using the data in the question,

Cash Movement

increase in inventories $ 300 ( $ 300)

Increase in accounts payable $ 150 $ 150

Decrease in accounts receivable $ 120 $ 120

Decrease in other current assets $ 60 $ 60

Decrease in other current liabilities $ 150 ($ 150)

Net movement in Cash $ (120)