This month, a company receives $10,000 from a regular customer, of which $6,000 is for products delivered last month and $4,000 is for products that will be delivered next month. What is the net change in Accounts Receivable this month (assuming no other transactions that affect Accounts Receivable)?

Correct answer. Sales on account increase AR and collections from customers for those sales on account decrease AR. Revenue of $6,000 for the products delivered last month would have been recorded last month, with a corresponding increase in AR. When the payment of $6,000 is received this month, the company records an increase in Cash and a decrease in AR. The payment of $4,000 for the products that will be delivered next month is recorded as an increase in Cash and a corresponding increase in Deferred Revenue. Revenues of $4,000 will not be recorded until next month.