An Increase in Accounts Receivable Represents an Increase in Net

question 17

True/False

An increase in accounts receivable represents an increase in net cash provided by operating activities because receivables will produce cash when they are collected.

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Definitions:

Operating Cycle

The duration between a company's purchase of inventory and the receipt of cash from accounts receivable.

Accounts Receivable Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services provided.

Inventory Period

The average time that inventory is held before it is sold or used in production.

Operating Cycle

Refers to the duration it takes for a company to buy goods or services, convert them into products, sell those products, and collect cash from the sales.