Why would a cash company have an accounts receivable on their financial statement?

Expert Solution

A company is considered as a cash company, if it is a listed is your whose assets on consolidated basis, consist of 70% or more of cash for short term investments, or a combination of both.

In the above given explanation cash company consists of cash or short term investments only to the extent of 70% or more, by this we can say that the remaining 30% or less of the assets can be in in the form of long term investments account receivables or in any other forms of current assets or non current assets.

every company makes its business by giving some short-term credit to its customers whom can be called as account receivables.

As usually all the companies have its account receivables on there financial statement under current assets section. as the same the cash company also has its accounts receivables on financial statement.

the difference of the financial statements of normal company and cash company is herbal company assets can be distributed into non current assets and current assets in any ratio but the assets of cash company should be 70% or more in current assets to be specific 70% or more of the acid should be in cash or short term investments which is readily available to realise the cash.

there is no particular reasons why the cash company has its account receivables on financial statements but, what are the reasons for the account receivables on financial statements of a normal company will be applicable to the reasons for account receivables on the financial statement of a cash company also.

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ekkarill92 answered 2 years ago

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