When computing net cash provided by operating activities, an increase in accounts receivable (net) during the year must be added to accrual-basis net income because more sales were made than those reflected in the income statement.

Question

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When computing net cash provided by operating activities, an increase in accounts receivable (net) during the year must be subtracted from accrual-basis net income because it represents sales that have not yet been collected in cash, thus not contributing to the cash flow from operating activities.

When Computing Net Cash Provided by Operating Activities, an Increase