Under the direct method, when accounts receivable increase during the period, it means that less cash was collected from customers than was recorded as revenue by the company.

Question

Quizplus · Accepted Answer

Under the direct method of preparing the cash flow statement, an increase in accounts receivable indicates that the company sold more on credit than it collected in cash, meaning less cash was collected from customers than was recorded as revenue.

Under the Direct Method, When Accounts Receivable Increase During the Period