An increase in accounts receivable will require additional financing unless the increase is offset by an equal decrease in another asset account.

Question

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An increase in accounts receivable means that the company is holding more unpaid invoices, which reduces their available cash. Unless this increase is offset by a decrease in another asset account, such as inventory or prepaid expenses, the company will need additional financing to cover their cash flow needs.

An Increase in Accounts Receivable Will Require Additional Financing Unless