If accounts receivable have increased during a period,
A)revenues on an accrual basis are less than revenues on a cash basis.
B)revenues on an accrual basis are greater than revenues on a cash basis.
C)revenues on an accrual basis are the same as revenues on a cash basis.
D)expenses on an accrual basis are greater than expenses on a cash basis.

Question

Quizplus · Accepted Answer

When accounts receivable increase, it indicates that sales have been made on credit, which are recognized immediately as revenue in accrual accounting, but not in cash accounting until the cash is actually received. Thus, revenues on an accrual basis are greater than revenues on a cash basis.

If Accounts Receivable Have Increased During a Period