If the December 31,2012,balance of accounts receivable is higher than the January 1,2012,balance,then the amount of cash collections will be less than the sales on account for the year.

Question

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If accounts receivable increased over the year, it indicates that not all sales on account were collected in cash, meaning cash collections were less than sales on account.

If the December 31,2012,balance of Accounts Receivable Is Higher Than