Why Are Increases in Accounts Receivable Reported as an Adjustment

question 211

Essay

Why are increases in accounts receivable reported as an adjustment to net income in the operating activities section of a statement of cash flows?

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Definitions:

Normative Statements

Statements that express opinions on how the world ought to be, involving value judgments rather than factual claims.

Expressions Of Facts

Statements that aim to convey information about reality or actual events without alteration.

Economic Model

A simplified representation or framework that economists use to describe and analyze economic processes, relationships, or phenomena.

Capital Goods

Long-lasting goods purchased and used by businesses to produce goods and services and contribute to their output.