When cash is going away from you (outgoing), it requires a negative sign (-).

Question

BlackTom AI · Accepted Answer

Restating the question: The statement claims that when cash is going away from you (outgoing), it requires a negative sign (-).

Option 1: True
- In many accounting and cash flow contexts, cash outflows are represented with a negative sign because they reduce the cash balance. This convention helps distinguish money leaving the entity from money entering it.
- For example, when you pay a bill, your cash decreases, and in a ledger or cash flow model you would record this as a deduction (negative amount), signaling an outflow.
- This interpretation aligns with common practices in personal finance tracking, where expenditures are shown as negative changes to cash.

Option 2: False
- There are scenarios where the sign convention treats outflows as positive in certain presentations, such as describing absolute amounts of cash paid without regard to direction, or in some simplified summaries where only the magnitude is shown.
- In some contexts (like visual diagrams or certain software defaults), outgoing cash might be represented separately from incoming cash without using signs at all, or might be shown as a separate category rather than a signed value.
- If someone is using a model where all cash movements are expressed as positive numbers and the direction is indicated by labels (outflow vs. inflow) rather than sign, then the statement would be misleading.

Additional nuance:
- The core concept hinges on the chosen sign convention. If the convention is that increases in cash are positive and decreases are negative, outgoing cash is negative. If a different convention is specified (e.g., always reporting positive magnitudes and labeling direction elsewhere), the single minus sign might not be used.
- Therefore, the correctness of the statement depends on the context and convention being used.

Summary of reasoning:
- The notion that outgoing cash decreases the cash balance supports a negative sign under standard accounting conventions, making True a consistent choice in that framework.
- However, alternate conventions could treat outflows differently, which is why False could be argued in those contexts. The key is recognizing sign conventions vary by system and presentation.

CSE 2111 AU2025 (10550) Carmen Quiz 8 - Chapter 8 - Financial Functions

When cash is going away from you (outgoing), it requires a negative sign (-).

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