Final answer:
The increase in Accounts Receivable by 10mm would lead to a decrease in cash, as it represents credit sales which have not yet been paid.
Step-by-step explanation:
The student's question, "Increasing AR by 10mm, what effect on cash?" is related to accounting operations within a business context. AR stands for Accounts Receivable, which represents the credit sales of a company, money owed by customers for products or services provided. When AR increases by 10mm, it indicates that there is an increase in sales made on credit, not an immediate increase in cash.
Cash balance would not immediately increase with a rise in Accounts Receivable. In fact, until the time that the receivables are actually paid by the debtors, there will be no increase in the company's cash reserves. Therefore, the correct answer to the student's question would be (b) Decrease Cash, because the company has transferred goods or services without receiving immediate payment, thus decreasing the immediate cash available.