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Assignment 2: Ethical Issue: Reclassification of Receivables

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Question;Assignment;2: Ethical Issue: Reclassification of Receivables;Respond to the following ethical issue concerning the;reclassification of receivables in your initial post;Moss Exports is having a bad year. Net income is only $60,000.;Also, two important overseas customers are falling behind in their payments to;Moss, and Moss's accounts receivable are ballooning.;The company desperately needs a loan. The Moss Exports board of;directors is considering ways to put the best face on the company's financial;statements. Moss's bank closely examines cash flow from operations. Daniel;Peavey, Moss's controller, suggests reclassifying as long-term the receivables;from the slow-paying clients. He explains to the board that removing the;$80,000 rise in accounts receivable from current assets will increase net cash;provided by operations. This approach may help Moss get the loan.;1.Using only the amounts given, compute net;cash provided by operations, both without and with the reclassification of the;receivables. Which reporting makes Moss look better?2.Under what condition would the;reclassification of the receivables be ethical? Unethical? Support your;response.

 

Paper#37341 | Written in 18-Jul-2015

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