Why are increases in accounts receivable a cash reduction on the cash flow statement?

Why are increases in accounts receivable a cash reduction on the cash flow  statement?

Priyanka Trainee Asked on December 22, 2014 in Accounting.
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1 Answer(s)

Since our cash flow statement starts with net income, an increase in accounts receivable is an adjustment to net income to reflect the fact that the company never actually received those funds.

Priyanka Gupta Accountant Answered on December 27, 2014.
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