An increase in accounts receivable does not require adjusting net income, if preparing the statement of cash flows using the indirect method.

Question

Quizplus · Accepted Answer

When preparing the statement of cash flows using the indirect method, an increase in accounts receivable is subtracted from net income because it represents revenue that has been recognized but not yet received in cash, affecting the cash flow.

An Increase in Accounts Receivable Does Not Require Adjusting Net