What is the impact on the cash flow statement from a decrease in accounts receivable, assuming the indirect method is used?
A) A decrease in the cash flow from operating activities
B) An increase in the cash flow from operating activities
C) An increase in the cash flow from financing activities
D) None.A decrease in accounts receivable has an impact only if the direct method is used

Question

Quizplus · Accepted Answer

When accounts receivable decreases, it means that less money is expected to be received from customers in the future. This increase in cash inflow from customers results in an increase in cash flow from operating activities on the cash flow statement. Therefore, the correct answer is B.

What Is the Impact on the Cash Flow Statement from a Decrease