Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What does the term 'disbursements' signify in financial reporting?

1. Incomes received

2. Borrowing funds

3. Spending of money

4. Investing in assets

The correct answer is: Spending of money

The term 'disbursements' in financial reporting specifically refers to the spending of money, typically in the context of business operations. This includes any payments made by an organization for various expenses, such as paying vendors, salaries, utility bills, and any other operational costs. Disbursements are important because they represent the outflow of cash, reflecting how money is used within a business or financial entity. In contrast, the other options relate to different financial activities. Incomes received would refer to the inflow of cash, whereas borrowing funds speaks to acquiring capital under an obligation to repay. Investing in assets describes the allocation of resources towards acquiring long-term items that have value, which is a different financial concept than the act of spending already available funds. Understanding disbursements is essential for effective financial management and reporting, as it helps track the company’s expenditures and cash flow.