Which of the following transactions would decrease Rosemary's cash balance?

Which of the following transactions would decrease Rosemary's cash balance?

• A. Receiving income from consultations
• B. Paying for office supplies
• C. Depositing personal funds
• D. Purchasing inventory

Answer: (B)

The transaction that would decrease Rosemary's cash balance is the payment for office supplies. When a business spends money on office supplies, the cash account is directly impacted because it reflects the actual cash flow out of the business. This reduction in cash occurs because the business is using its available funds to acquire necessary materials for operations.

When engaging in financial transactions, it's important to recognize how different activities affect cash flow. For instance, receiving income from consultations or depositing personal funds would increase the cash balance, while purchasing inventory typically involves an outflow of cash but does not directly correspond to a decrease like paying for office supplies does since inventory could be considered an investment in future sales.