An increase in the accounts receivable account during the year should be reported on the statement of cash flows as:
A)An increase in cash flows from operating activities
B)An increase in cash flows from investing activities
C)A decrease in cash flows from operating activities
D)A decrease in cash flows from investing activities
E)An increase in cash flows from financing activities

Question

Quizplus · Accepted Answer

An increase in accounts receivable means that the company has sold goods or services on credit, and has not yet received cash for those sales. Since this represents a decrease in cash flows from operating activities (as it is an increase in accounts receivable), it should be reported as such on the statement of cash flows.

An Increase in the Accounts Receivable Account During the Year