Which of the following is NOT considered an example of cash inflow?

The reasoning behind identifying payment of expenses as not being an example of cash inflow is based on the nature of cash flows in accounting. Cash inflows refer to the movement of cash into the business, which increases the cash balance. Examples of cash inflows include receipts that come from everyday operations or transactions that generate income for the company.

For instance, interest earned represents income from investments or savings, receipts from debtors involve money collected from customers who have purchased goods or services on credit, and the sale of a fixed asset generates cash from disposing of a non-current asset, all of which contribute positively to cash flow.

In contrast, the payment of expenses signifies a cash outflow, as money is being spent or disbursed by the business to cover operating costs, such as rent, utilities, or wages. This reduces the cash balance of the company rather than increasing it. Understanding the distinction between cash inflows and outflows is crucial for effective cash flow management and financial analysis within a business.