If my cash flow has an increase in accounts payable of $1700 and an increase in accounts receivable of $2300 and a beginning cash position of $1000. What is my ending cash position?

Question

BlackTom AI · Accepted Answer

To solve this, we need to adjust the beginning cash by changes in working capital components that affect cash.
First, an increase in accounts payable of 1700 means we have not yet paid that amount, which adds to cash available, so we add 1700 to cash.
Next, an increase in accounts receivable of 2300 represents money we have not yet collected from customers, effectively reducing cash on hand, so we subtract 2300 from cash.
Starting with the beginning cash of 1000, the calculation becomes: 1000 + 1700 − 2300.
Performing the arithmetic: 1000 + 1700 = 2700, and 2700 − 2300 = 400.
Thus, ending cash position is 400.
Now, evaluating the answer options:
- Option "$1400": This would imply a smaller net use of cash than the AR increase or a miscount of changes; it ignores either the AR outflow or incorrectly netts the components.
- Option "-$400": A negative ending cash would suggest a cash shortfall, which is not supported by the given data since beginning cash plus inflows minus outflows remains positive.
- Option "$400": This matches the net calculation 1000 + 1700 − 2300 = 400, so it is correct.
- Option "$1000": This would correspond to no net effect from AR or AP, which ignores the 1700 inflow and the 2300 outflow, making it inconsistent with the scenario.

VPAB13H3 S LEC01 Final Exam

If my cash flow has an increase in accounts payable of $1700 and an increase in accounts receivable of $2300 and a beginning cash position of $1000. What is my ending cash position?

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