In determining cash flow from operating activities, which of the following adjustments will be made as a result of an increase in accounts receivable during a period?

Question

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An increase in accounts receivable means that less cash was collected during the period compared to sales made on credit. Therefore, the adjustment made to net income will be a deduction in order to reflect the cash that was not received during the period. This adjustment will only be made when using the indirect method of calculating cash flow from operating activities.

In Determining Cash Flow from Operating Activities, Which of the Following