Question
(c) Which of the following statements best describes the reason that accounts receivable is listed on the statement of cash flows? An increase in accounts
(c) Which of the following statements best describes the reason that accounts receivable is listed on the statement of cash flows?
An increase in accounts receivable means Sales have also increased. Sales are an increase in cash and contribute a positive cash flow. Therefore, an increase in accounts receivable is listed on the cash flow statement as a positive adjustment to net income.
An increase in accounts receivable means more cash has been received than has been reported in Sales. This surplus is an increase in cash and contributes a positive cash flow. Therefore, an increase in accounts receivable is listed on the cash flow statement as a negative adjustment to net income.
An increase in accounts receivable means less cash has been received than has been reported in Sales. This deficit is a decrease in cash and contributes a negative cash flow. Therefore, an increase in accounts receivable is listed on the cash flow statement as a negative adjustment to net income.
An increase in accounts receivable means Sales have also increased. Sales have increased, but cash has not yet been received. Therefore, an increase in accounts receivable is listed on the cash flow statement as a negative adjustment to net income.
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Handbook Of Alternative Assets
Authors: Mark J. P. Anson
2nd Edition
047198020X, 978-0471980209
