Ph4IP2AcctReceivable_vs_NoteReceivable

Ph4IP2AcctReceivable_vs_NoteReceivable - Phase 4 Individual...

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Phase 4 Individual Project 2 1 Running Head: PHASE 4 INDIVIDUAL PROJECT 2: ACCT. RECEIVABLE VS. NOTE RECEIVABLE Phase 4 Individual Project 2: Acct. Receivable vs. Note Receivable Chris Normand Colorado Technical University Accounting 202-02 Prof. Robyn Swinehart May 10, 2010
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Phase 4 Individual Project 2 2 Phase 4 Individual Project 2: Acct. Receivable vs. Note Receivable It has come to my attention Good Time Adventures is considering moving their “Slow Paying” customer receivables from accounts receivables to a more long term asset, namely, notes receivable. I have been asked by my manager, Mr. Smith, to address this issue. In doing so, I will give as much information as possible as to the result of such a change in accounting practices and what impact it will have on the company’s financial statements. I realize Good Time Adventures is trying to obtain a loan from ABC Bank in the amount of $2.7 million. I see why this bookkeeping change has risen as an option to some. It is believed that by moving the amounts owed to the company in accounts receivable to notes receivable, it will help the company appear more financially stable by reflecting a more positive cash flow from operations. First, let us discuss the way in which cash flow is reported by each account and clear up some misconceptions. All companies report the increase, in accounts receivable, as a decrease in cash flow in the operating portion of the cash flow statement. Therefore,
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This note was uploaded on 08/22/2010 for the course ACCOUNTING Acct202 taught by Professor Swinehart during the Spring '10 term at Colorado Technical University.

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Ph4IP2AcctReceivable_vs_NoteReceivable - Phase 4 Individual...

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