3.4 Mislead users of enterprises’ f

3.4 Mislead users of enterprises’ financial statementThe existence of accounts receivable may mislead users of enterprises’ financial statement, making them fail tomake correct evaluation on enterprises’ assets and ability of payment and repayment. The accounts receivable,especially the one that has already become bad debt but not be treated as bad debt, will increase enterprises’ assetsvirtually. The calculation of many indicators that are used to evaluate enterprises’ ability of payment and repayment,such as current ratio, quick ratio, and asset-liability ratio, takes current asset, quick asset, and total asset of accountsreceivable into consideration. The untruth of assets leads to the falsehood of enterprises’ ability of payment andrepayment. In other words, because of the poor cash-ability of accounts receivable, users of enterprises’ financialstatement may overate enterprises’ assets and ability of payment and repayment.