What changes in the balance sheet accounts would constitute sources of

What changes in the balance sheet accounts would constitute sources of funds? What changes would be considered uses of funds?

What will be an ideal response?

ANSWER

Increases in liabilities and equity would be considered sources of funds. For example, increases in debt, A/P, N/P, R/E or equity. Uses of funds are increases in assets, such as increases in A/R, inventory, land, buildings, and equipment. At the same time, a reduction in assets could also be considered a sources of funds while a decrease in liabilities and equity would be uses of funds.