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Why are increases in accounts receivable a cash reduction on the cash flow statement?

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Question added by Deleted user
Date Posted: 2017/02/25
Khateeb Hussain
by Khateeb Hussain , Senior Branch Accountant , Medicas International

Increase in accounts receivable means decrease in cash receipts or inflows so thats why cash flow statement shows it as reduction or decrease in cash.

Khaliq Raza MBA   MS   CFE  AFA
by Khaliq Raza MBA MS CFE AFA , Finance Manager , Vertex Trading

Cash flow statement depends on in flow as well. When we do all business on Credit so the in flow value will be reduce that definitely reduce the Cash in Cash flow statement. Thanks

Madan Khadka
by Madan Khadka , Accounting Manager , P

If debtors are increased of the company that reduce the cash flow statement of that company because account receivable are increase by the selling of the goods or services that products purchased or invested by the company's cash at specific period.Thus, Cash outflow from the company to acquire the goods or services for sale that consequence to deduct  the cash flow statement owing to outflow of the cash.

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