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The correct answer is more revenue has been earned with payment in the form of credit.
An rise in an organization's accounts receivable balance indicates that more income has been generated with credit payments; thus, more cash payments will need to be collected in the future. The amounts billed to the consumers who made credit payments, on the other hand, were received in cash if a company's A/R balance decreased. The statement of cash flows rises with net earnings when accounts receivable gets payment for a sale. This is due to the fact that the unpaid invoice is no longer considered an asset but rather capital retained. Increases in accounts receivable, on the other hand, show up as net earning reductions. On the debit side, the amount of accounts receivable rises, while on the credit side, it falls.
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