The work in the accounts receivable and sales accounts is often used to know the cash collections from customers. When using the direct method, Accounts receivable often decreases when the company received more cash from its customers than credit sales made by the company.
- Accounts receivable change is simply known as the increase in accounts receivable as it affects cash flow while a decrease helps cash flow.
The accounts receivable asset tells how much money customers who bought some products on credit still owe the business.
The direct method for preparing the statement of cash flows reports is the cash received and cash paid from operating activities.
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