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Important information about Cash Flow Statement

In the statement of cash flows, an increase in the accounts receivable balance from the beginning of the period to the end of the period would:
A. be added to net income because this represents earned revenues that have not been collected.
B. be subtracted from net income because this represents earned revenue provided by operating earnings.
C. be added to net income because this means that revenues were less than cash collected.
D. be subtracted from net income because this means that revenues were more than cash collected.

Solution Preview

Please see response attached, which is also presented below. The best response is highlighted in RED in the attached response, followed by an explanation of why this is the best answer. I hope this helps and take care.

RESPONSE:

Cash Flow Statement In the statement of cash flows, an increase in the accounts receivable balance from the beginning of the period to the end of the period would:

A. be added to net income because this represents earned revenues that have not been collected.
B. be subtracted from net income because this represents earned revenue ...

Solution Summary

In regards to a cash flow statement, this solution provides the best answer for one multiple-choice question as follows: In the statement of cash flows, an increase in the accounts receivable balance from the beginning of the period to the end of the period would: (a) be added to net income because this represents earned revenues that have not been collected, (b) be subtracted from net income because this represents earned revenue provided by operating earnings, (c) be added to net income because this means that revenues were less than cash collected, or (d) be subtracted from net income because this means that revenues were more than cash collected. An explanation is also provided.

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