In the lecture (Part 3&4), we discussed the relationship between balance sheet and the cash flow statement. Please a) use accounts in the balance sheet to give an example for each of the following 4 statements; b) discuss which section in the cash flow statement you should record cash flow in your example (specify if it is a cash inflow or outflow). (2pts, 0.5 for each statement)

(Hint: You may use the financial statements from the Meals for the Homeless to help you think about examples).

1) Asset increase uses cash.

Example answer: If an organization purchases supplies, it will lead to an increase in inventory account and a decrease in cash. This cash outflow will be recorded under cash flows from operating activities.

For this statement, you need to give a different example using any asset account in the balance sheet.

2) Asset decrease provides cash.

3) Liability increase provides cash

4) Liability decrease uses cash.