If the December 31,Year 1,balance of accounts receivable is lower than the January 1,Year 2,balance,then the amount of cash collections will be more than the sales on account for the year.

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A lower accounts receivable balance at the end of the year means that more cash was collected from customers than sales made on account, which could be due to early payments, write-offs, or allowances.

If the December 31,Year 1,balance of Accounts Receivable Is Lower