If Accounts Receivable decreases on a comparative balance sheet, this means:
A) collections were more than credit sales.
B) credit sales are decreasing.
C) credit sales are increasing more than collections.
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

When Accounts Receivable decreases, it indicates that collections on outstanding invoices (money received from customers) exceed the amount of new credit sales. This means the company is collecting cash from its customers at a faster rate than it is extending credit for new sales.

If Accounts Receivable Decreases on a Comparative Balance Sheet, This