A Reduction in Accounts Receivable Uses Cash,reducing the Firm's Net

question 107

True/False

A reduction in accounts receivable uses cash,reducing the firm's net cash balance.

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Definitions:

Preferential Payment

A payment made by a debtor that favors one creditor over others, often scrutinized in bankruptcy proceedings.

Consumer Debt

Debt that is incurred by an individual primarily for personal, family, or household purposes.

Bankruptcy Proceedings

The legal process through which individuals or entities unable to pay their debts can seek relief from some or all of their financial obligations.

Insolvent

The condition of being unable to pay debts as they fall due, or having liabilities that exceed assets.