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marie alford
on Oct 28, 2024

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When preparing the statement of cash flows,the reason that net sales revenue is adjusted for the change in accounts receivables is to convert net sales to cash collected from customers,since accounts receivable represents sales revenue not collected from customers at the beginning and end of the accounting year.

Statement of Cash Flows

A report detailing the total cash received by a company from its operational activities and external investments, alongside the total cash expenditures for business activities and investments over a specific time frame.

Net Sales Revenue

The amount of revenue from sales of goods or services after subtracting returns, allowances for damaged or missing goods, and discounts.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

  • Recognize the process of adjusting net sales revenue to reflect cash collected from customers in the statement of cash flows.
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