Question

"An increase in accounts receivable and a decrease in accounts payable will usually reduce the amount of new external funds required.

A True
B False"

Answer 1

An increase in accounts receivable and a decrease in accounts payable will usually reduce the amount of new external funds required.

Step-by-step explanation:

An increase in accounts receivable and a decrease in accounts payable will usually reduce the amount of new external funds required. This statement is True.

When accounts receivable increase, it means that customers owe the business more money, which can be utilized to fund its operations instead of seeking external funds. On the other hand, a decrease in accounts payable indicates that the business owes less money to its creditors, reducing the need for additional external funding.