Cash collections from customers equals sales on account less the increase in accounts receivable.

Question

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Cash collections from customers represent the amount of money received from customers for goods or services sold on account. Sales on account are the total amount of sales made to customers on credit. The increase in accounts receivable is the difference between the beginning and ending balances of accounts receivable. Therefore, cash collections from customers equals sales on account less the increase in accounts receivable.

Cash Collections from Customers Equals Sales on Account Less the Increase