So, for example, accounts receivable.

So you have accounts receivable of 400

So we have an increase in accounts receivable.

So over here we have a net change in accounts receivable.

AR is short for accounts receivable, just to save some space

Accounts Receivable, that they're not changing over the course of the year.

When they pay you the 400, it goes from accounts receivable to cash.

Now, with cash basis, you would have added that to your revenue, but here, we already accounted for it in the accounts receivable, we already took that revenue.

But I have an accounts receivable of 400, so my total assets now are 300 of assets, remember, accounts receivables aren't assets, because someone owes me something, someone owes me cash in the future.

The way that you account for that, is on your balance sheet, you say that you are essentially owed 400, so this accounts receivable this is essential stuff that other people owe you, you need to receive this from other people, but it's an asset, other people have an obligation to you

So let's just think about it, when you have an increase in account receivable, you're kind of letting people owe you money you're letting people owe you 400 if you didn't let them owe you, that would have been cash, so you're kind of pushing back the time that you're getting cash.