Which statement differentiates cash receipts and cash disbursements?

• A. They mean the same thing.
• B. Cash receipts are for revenue, disbursements for expenses.
• C. Cash receipts are incoming funds; disbursements are cash outflows.
• D. Cash receipts are cash outflows; disbursements are inflows.

Answer: (C)

Cash movements hinge on inflows versus outflows. Cash receipts are funds that come into the business, increasing cash on hand. Cash disbursements are funds that go out, reducing cash. A simple way to picture it: money you collect from customers is a cash receipt; money you pay to suppliers, employees, or lenders is a cash disbursement. This is why this statement is correct: it clearly defines receipts as incoming and disbursements as outgoing. Note that receipts aren’t limited to revenue in the accounting sense, and disbursements aren’t restricted to expenses—they cover any cash payments. The other ideas either mix up the direction or tie receipts to expenses inappropriately, which isn’t accurate.