If the revenues were $700 and cash received from those revenues was $2,000, what might the business concerns be with higher cash than revenues?
The account receivable is the money owed from debtors (customers who purchase goods on credit). The sales are recorded as a credit sale or a cash sale. In a cash sale, the cash is collected immediately.
Answer and Explanation:
Following may be the reason for receiving the cash more than the sales revenue: -
(1) It has been collected from account receivables.
(2) Sales have not been recorded.
(3) Cash received has been wrongly posted for the sales revenue or account receivables.
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from Finance 101: Principles of FinanceChapter 18 / Lesson 3