When using the direct method for cash flows, one will notice that an increase in accounts receivable would result in a DECREASE in cash.
When an accounts receivable increases:
Because the people did not pay cash for the goods yet took the goods, the company will see a reduction in its cash balance as the cash value of the goods left the company and there was no cash inflow from that activity.
In conclusion, an increase in accounts receivable leads to a decrease in cash.
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