Which of the following could be classified as a source of cash for a business?

Prepare for the SACE Stage 2 Accounting Exam. Test your knowledge with flashcards and multiple choice questions, with hints and explanations for each question. Get ready to excel!

Sales revenue is classified as a source of cash for a business because it represents the money generated from selling goods or services to customers. When a company completes a sale, it typically receives cash or accounts receivable, which translates to incoming cash flow. This inflow is crucial for a business as it can be used to pay expenses, invest in new opportunities, or repay debts, thereby contributing to the overall financial health of the organization.

In contrast, inventory purchases and employee wages represent outflows of cash. Inventory purchases involve spending cash to acquire products that will be sold in the future, while employee wages are expenses that must be paid out regularly, affecting cash availability. Long-term loans, while they may initially provide cash, actually represent liabilities that the business must repay over time, thus affecting future cash flow.

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