Future Business Leaders of America (FBLA) Agribusiness Practice Test

What is a common source of cash inflow for a business?

1. Payment of accounts payable

2. Pursuing loans

3. Sale of goods and services

4. Purchase of equipment

The correct answer is: Sale of goods and services

The sale of goods and services serves as a fundamental source of cash inflow for any business. When a company sells its products or services to customers, it receives payment, which directly increases its cash reserves. This inflow is essential as it allows the business to maintain its operations, pay its expenses, and invest in future opportunities. In a typical business model, the continuous generation of revenue through sales not only sustains the business but also provides the necessary liquidity to fulfill other financial obligations. This revenue stream is often the primary driving force behind the overall profitability and financial health of a company. Other options, such as payment of accounts payable and the purchase of equipment, do not represent cash inflows. Instead, they are related to cash outflows or management of liabilities. Pursuing loans can provide cash inflow, but it is not as consistent or reliable as the revenue generated from selling goods and services. Thus, the sale of goods and services stands out as the most common and pivotal source of cash inflow.