Question

You are the accountant of a small company that wants to expand. The CEO is negotiating a loan with the bank, and the bank requires a statement of cash flows. The CEO is concerned because operating cash flows are down compared to prior years. The main reason is deteriorating collections from accounts receivables. The CEO presents three options to address the situation prior to year end and the preparation of the statement of cash flows:
Option 1: Convert some of the oldest receivables to long-term notes receivable
Option 2: Sell some receivables to a collector for $0.65 per $1 of receivables
Option 3: Delay payment of all outstanding accounts payable until the next year
Required
a. Comment on the appropriateness of each option.
b. Is there an ethical dilemma involved?
c. How would you respond to the CEO?


$1.99
Sales0
Views75
Comments0
  • CreatedJuly 16, 2015
  • Files Included
Post your question
5000