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Question
Which of the following is not external sources of cash?
Which of the following is not external sources of cash?
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Solution
The correct option is B Depreciation
- External sources of finance are equity capital, preferred stock, debentures, term loans, venture capital, leasing, hire purchase, trade credit, bank overdraft, factoring ,Sale of fixed assets, investment etc.
"Depreciation is a source of funds" is a common but misleading statement.- It should be understood that depreciation does not provide cash only sales and external financing can do this.
- Being a non-cash expense, depreciation is only a means of conserving the outflow of cash from the firm.
- External sources of finance are equity capital, preferred stock, debentures, term loans, venture capital, leasing, hire purchase, trade credit, bank overdraft, factoring ,Sale of fixed assets, investment etc.
"Depreciation is a source of funds" is a common but misleading statement.
- It should be understood that depreciation does not provide cash only sales and external financing can do this.
- Being a non-cash expense, depreciation is only a means of conserving the outflow of cash from the firm.
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