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Question:

How will a firm’s operating cash flow be affected by a decrease in accounts receivable and by an increase in accounts payable?

A Both will increase operating cash flow.
explanation

A decrease in the accounts receivable amount on the balance sheet indicates that cash collections exceed revenues (sales). This increases operating cash flow because receivables are being collected. An increase in the accounts payable amount on the balance sheet indicates that purchases from suppliers exceed cash payments. This increases operating cash flow because the cash was not used to pay the suppliers

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