Best Exports has noticed their current year net income is only$60,000. In order to...

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Accounting

Best Exports has noticed their current year net income is only$60,000. In order to get a loan from their bank to assist thebusiness they will need to provide a statement of cash flows. Inreviewing the statement of cash flows, you notice a large increase($80,000) in accounts receivable due to two of your largestcustomers being behind in payments. Since the bank looks at theoperating activities, this increase will create concern. You make asuggestion to reclassify the accounts receivables to long-term,thus removing them from current assets will increase the net cashfrom operations.
Under what circumstances would this reclassification beconsidered ethical or unethical? Support your selection by findingan article which explains your choice.

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4.5 Ratings (778 Votes)

Answer The question is not specific which accounting standards are applicable to the organization Assuming IFRS Current assets are those assets that are expected to be used sold or consumed within 12 months Current assets include according to the IFRS Current inventories Trade See Answer

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In: AccountingBest Exports has noticed their current year net income is only$60,000. In order to get...Best Exports has noticed their current year net income is only$60,000. In order to get a loan from their bank to assist thebusiness they will need to provide a statement of cash flows. Inreviewing the statement of cash flows, you notice a large increase($80,000) in accounts receivable due to two of your largestcustomers being behind in payments. Since the bank looks at theoperating activities, this increase will create concern. You make asuggestion to reclassify the accounts receivables to long-term,thus removing them from current assets will increase the net cashfrom operations.Under what circumstances would this reclassification beconsidered ethical or unethical? Support your selection by findingan article which explains your choice.