Question
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,
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 Mosss 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 companys financial statements. Mosss bank closely examines cash flow from operating activities. Daniel Peavey, Mosss controller, suggests reclassifying the receivables from the slow-paying clients as long-term. He explains to the board that removing the $80,000 increase in accounts receivable from current assets will increase net cash provided by operations. This approach may help Moss get the loan. 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? Under what condition would the reclassification of the receivables be ethical? Unethical
? Remember: your initial post must be between 150-500 words. In order to earn all 10 points you must make a substantive comment on another student's post. You don't have to stay inside your alpha groups to comment. You may post a comment on the other question.
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