If the revenues were $700 and cash received from those revenues was $2,000, what might the...

Question:

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?

Account Receivables:

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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Cash Collection & Concentration: Definition & Components

from Finance 101: Principles of Finance

Chapter 18 / Lesson 3
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