An increase in the accounts receivable balance increases the cash flow of a firm.

Question

Quizplus · Accepted Answer

An increase in the accounts receivable balance means that the firm is owed more money by its customers, but this does not necessarily mean that the cash flow of the firm increases. The firm's cash flow will only increase when the customers actually pay their outstanding balances, which may not happen immediately. In the meantime, the firm may have to use other sources of cash to cover its expenses.

An Increase in the Accounts Receivable Balance Increases the Cash