Week 4 EOC: Chapter 5, Question 2

Answers: 

a. The change in Cash resulted in a Use of Funds because the dollar amount increased on the balance sheet from what you started with. "When you deposit the cash into your bank account (increase in the cash account), you do not have the money in your hand to spend. In effect, the bank is “using” your money, so it is a use of funds." (Pg. 148, Managerial Accounting for the Hospitality Industry.) The amount of that change was increased by $14,000.

b. The change reflected a Use of Funds in Net Receivables."Net Receivables represents money that guests owe you for products or services that you have provided. If it increases, then that means that more people owe you money. Since you have provided products or services without being paid, this is a use of funds." (Pg. 148, Managerial Accounting for the Hospitality Industry.) The amount of that change was a $30,000 increase.

c. Notes Payable reflected a Use of Funds. Notes payable are loans or money you borrowed. "If you decrease notes payable by paying back money you borrowed, this is a use of funds for you," (Pg. 151, Managerial Accounting for the Hospitality Industry.) because you no longer have that money. The amount of the change was decreased by $44,000.

d. Retained Earnings reflected a Source of Funds for the business. "Retained earnings represent the accumulated account of profits over the life of the business that have not been distributed as dividends. If your retained earnings increases, that means you have increased your net income for the year, thus providing a source of funds." (Pg. 152, Managerial Accounting for the Hospitality Industry) The amount of Retained earnings was increased by $104,000.

e. "Sources and Uses of Funds are the inflows and outflows of money affecting the cash position." (Pg. , Managerial Accounting for the Hospitality Industry) The total amount of Sources and Uses of Funds was $743,000.