Question

Cash received from debtors _______________.

• A. Sources of funds
• B. Sources of cash
• C. Application of funds
• D. No flow of fund

Answer 1

The correct option is D No flow of fund

When a cash payment is received from the debtor, cash is increased and the accounts receivable is decreased. When recording the transaction, cash is debited, and accounts receivable are credited.

A debtor is a person, company, or other entity that owes money. In other words, the debtor has a debt or legal obligation to pay the amount owed. So the cash received from debtors is no flow of funds.