A company reported an increase in accounts receivable and an increase in unearned revenues during 2010.Which of the following statements is correct?
A)Cash collected from customers equals sales revenues plus both the increase in accounts receivable and the increase in unearned revenues.
B)Cash collected from customers equals sales revenues minus both the increase in accounts receivable and the increase in unearned revenues.
C)Cash collected from customers equals sales revenues plus the increase in accounts receivable, minus the increase in unearned revenues.
D)Cash collected from customers equals sales revenues minus the increase in accounts receivable, plus the increase in unearned revenues.

Question

Quizplus · Accepted Answer

An increase in accounts receivable is deducted because sales revenues exceed cash collections; an increase in unearned revenues is added because cash collections exceed revenues earned.

A Company Reported an Increase in Accounts Receivable and an Increase