When accounts receivable increase during the year, revenues on an accrual basis are lower than revenues on a cash basis.

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When accounts receivable increase during the year, it indicates that some of the revenues recorded on an accrual basis have not yet been received in cash. Therefore, revenues on an accrual basis are higher than revenues on a cash basis, because accrual accounting records revenues when they are earned, not when the cash is received.

When Accounts Receivable Increase During the Year, Revenues on an Accrual