An overall increase in accounts receivable implies that cash collections were less than sales on account.

Question

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An increase in accounts receivable means that more customers owe money to the company, which implies that the company made more sales on account. However, if the amount of cash collections is less than the amount of sales on account, then the overall accounts receivable balance will increase. This is because the money owed by customers has not been fully collected yet.

An Overall Increase in Accounts Receivable Implies That Cash Collections