Why Are Increases in Accounts Receivable Reported as an Adjustment

question 72

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:

Credit Card Companies

Financial institutions that issue credit cards and manage accounts, facilitating electronic payments and extending credit to consumers.

Minimum Payment

The smallest amount of money that one must pay on a debt for a particular period, often used in the context of credit card debts.

Financial Distress

A situation where an individual or company cannot meet or has difficulty paying off its financial obligations to creditors.

Anchored

A cognitive bias where an individual relies too heavily on an initial piece of information (the "anchor") when making subsequent judgments or decisions.