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What does the accounts receivable line on the cash flow statement mean?
To calculate the accounts receivable adjustment amount, subtract the accounts receivable entry on the balance sheet for the current period from the accounts receivable entry on the balance sheet for the previous period. Here is why: Let's say, for example, that at the end of the previous period, customers owed you $5,000. Currently, they owe you $20,000. You need to subtract $15,000 from the cash from operating activities on the cash flow statement. On the other hand, if at the end of the previous period, customers owed you $20,000, and currently they owe you only $5,000, you would add $15,000 to the cash from operating activities to reflect the fact that you recently received $15,000 in payments. Notice that none of this is reflected on the income statement.
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