If Accounts Receivable Have a Positive Effect on Cash Flow

question 90

True/False

If accounts receivable have a positive effect on cash flow that is because accounts receivable increased during the year.

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Definitions:

Underapplied Overhead

The situation where the allocated manufacturing overhead is less than the actual overhead incurred, leading to an adjustment need in accounting records.

Adjusting Entry

An accounting journal entry made to amend the preliminary financial records before preparing financial statements.

Manufacturing Overhead

Indirect costs related to manufacturing, including utilities, rent for manufacturing facilities, and equipment maintenance, not directly tied to individual units produced.

Overapplication of Overhead

A situation where the allocated overhead costs exceed the actual overhead costs incurred.