Practice
Check your answer
Choose a response, then check the answer and explanation.
A consulting firm collected 386,000 from clients during the year. Accounts receivable were 41,000 at the start of the year and 57,000 at the end. There was no unearned revenue in either year.
The gap between the two bases is the change in the balance sheet accounts sitting between performance and payment. A rising receivable means the firm earned more than it collected.