When considering Form 1040 "capital gains" as a source of cash in the global cash flow formula, the:

Using the asset selling prices as a source of cash in the global cash flow formula reflects a crucial aspect of understanding the impact of capital gains on liquidity. In financial analysis, cash flow assessments consider not only the profitability of asset sales but also the actual cash that can be generated from those transactions.

When asset selling prices are recognized as a source of cash, this indicates an acknowledgment of the cash inflow from selling an asset. If the selling price exceeds the purchase price, that surplus amount is the capital gain. However, what sets the correct answer apart in this context is the stipulation that the sales proceeds can be utilized as a source of cash only when those proceeds are not reinvested into another asset. This is essential because if the cash is continually reinvested, it doesn't effectively contribute to liquidity or cash availability for other expenditures or obligations.

The approach taken in this answer illustrates a critical understanding of cash flow management. When analyzing the financial situation, it is important to differentiate between what cash is actually available for use versus what might be on paper as profit or potential gain that hasn't yet been realized in terms of liquid assets.

The other options suggest limitations or exclusions that don’t align with this understanding of cash availability. For example, excluding capital gains altogether