Question

An increase in accounts receivable on a comparative balance sheet indicates that more ______ during the accounting period.

a. expenses incurred than sales
b. revenue earned cash was collected than sales
c. revenue earned sales revenue was earned than cash
d. was collected sales
e. revenue was earned than expenses incurred

Answer 1

An increase in accounts receivable suggests that a company earned more revenue than it collected in cash, often due to credit sales. Therefore correct option is C

Step-by-step explanation:

An increase in accounts receivable on a comparative balance sheet indicates that more revenue was earned than cash was collected during the accounting period. This situation occurs when a company makes sales on credit, thus recognizing sales revenue without having received immediate payment. As a result, while revenue increases, cash flow does not rise proportionally until those receivables are collected.