Question

An increase in the accounts receivable account implies which of the following? multiple choice

a. the firm's cost of sales has decreased relative to the prior year
b. cash flow from operating activities increases
c. cash flow from operating activities decreases
d. the firm's sales have decreased relative to the prior year

Answer 1

An increase in the accounts receivable account implies that cash flow from operating activities decreases.

Step-by-step explanation:

An increase in the accounts receivable account implies that cash flow from operating activities decreases.

Accounts receivable represents the amount of money owed to a company by its customers for goods or services sold on credit.

When the amount of accounts receivable increases, it means that more customers owe money to the company, resulting in a decrease in cash flow from operating activities.