There Is Significant Interaction Between Cash Receipt Transactions and Accounts

question 58

Multiple Choice

There is significant interaction between cash receipt transactions and accounts receivable because _______.

• A)the creation of an account receivable indicates receipt of cash
• B)a misstatement of cash receipts will result in a misstatement of accounts receivable.
• C)a misstatement of cash receipts will result in a misstatement of interest payments
• D)the settlement of an account receivable will result in a decrease to the cash account

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Definitions:

Asset

Any resource owned by a business or an individual that is expected to provide future benefits.

Liabilities

Financial obligations or debts that a company or individual owes to others, which must be satisfied in the future.

Revenues

The total amount of money received by a company from its business activities, such as sales of goods or services, over a specified period.

Adjusting Entries

Journal entries made at the end of an accounting period to update the accounts and ensure that the correct amounts are reported in the financial statements.