(L.O. 9) If ending accounts receivable exceeds the beginning accounts receivable:

a. cash collections during the period exceed the amount of revenue earned.

b. net income for the period is less than the amount of cash basis income.

c. no cash was collected during the period.

d. cash collections during the year are less than the amount of revenue earned.

Approach and Explanation: Write down a format for reconciling the amount of cash receipts to the amount of revenue earned.

An increase in accounts receivable indicates that the amount of revenue earned (and recognized)
exceeds the amount of cash collected. Thus, net income for the period exceeds the amount of cash basis income. (Solution = d.)

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Cash receipts Beginning accounts receivable Ending accounts receivable Revenue earned Fill in what you know from the question. Cash receipts Beginning accounts receivable Ending accounts receivable Revenue earned ( ) More than beginning receivable Greater than X