The Adams brothers have decided to obtain the loan from the bank for the $1,000,000 to start the adventure camps. Analysis of Adams Brothers Outdoor Adventures operating cash for the year shows an increase in Accounts Receivables. Further analysis reveals that several of the businesses’ corporate clients have been very slow in paying, resulting in a decline in operating cash flows. Sam suggests moving the accounts of the slow-paying clients from Accounts Receivable to a long-term liability account to make the company’s financial statements look better. Write a 600–800-word letter to the Adams brothers in which you discuss the reclassification of your their account receivables to long-term liabilities. For full credit, you should answer the following questions in your report: •What impact might this have on the statement of cash flows? ?Provide 1–2 examples of the numbers that would change. •Will this make the company look better on paper? •Could it help the company get the loan? Why or why not? •Under what condition(s) would this reclassification of Accounts Receivable be ?ethical? Why? ?unethical? Why?
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