Question

How does the following transaction impact cash flow?

Recording an account receivable for the sale of goods to a customer.
A) Positive (Increase).
B) No Impact.
C) Negative (Decrease).
D) It depends on the customer's payment.

Answer 1

Recording an account receivable for the sale of goods to a customer has a positive impact on cash flow as it represents money owed to the company.

Step-by-step explanation:

The recording of an account receivable for the sale of goods to a customer has a positive impact on cash flow. When a sale is made on credit, it results in an increase in accounts receivable, which represents money owed to the company. Although the actual cash is not received at the time of the sale, the company still records the sale as revenue, which has a positive effect on its cash flow statement.