Answer:
a misstatement of cash receipts will result in a misstatement of accounts receivable.
Explanation:
A financial statement is a written report that quantitatively describes a firm's financial health. Under the financial statements is a cash-flow statement, which is used to record the cash inflow and cash equivalents leaving a business firm.
Basically, financial statements are formally written records of the business and financial activities of a business entity or organization.
There are four (4) main types of financial statements and these are;
1. Balance sheet.
2. Cash flow statement.
3. Income statement.
4. Statement of changes in equity.
A current asset can be defined as all of the assets that are being owned by a company or business entity and are expected to be converted into their cash equivalent through sales or use within a period of one year of its date on the organization's balance sheet.
Some examples of current assets are account receivables, marketable securities, cash equivalent, etc.
In Financial accounting, there exist a significant level of interaction between cash receipt transactions and accounts receivable because a misstatement of cash receipts will result in a misstatement of accounts receivable, which gives information about legally enforceable monetary claims that are to be recovered by a company from a customer who is yet to make payment.
