What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?
A) As offsets to capital.
B) By means of footnotes only.
C) As assets but separately from other receivables.
D) As trade notes and accounts receivable if they otherwise qualify as current assets.

Question

Quizplus · Accepted Answer

It is preferable to present accounts receivable from officers, employees, or affiliated companies as assets but separately from other receivables on the balance sheet. This allows for transparent and clear reporting of the company's finances and any potential conflicts of interest. Option A is not appropriate because offsets to capital can be misleading and obscure the company's true financial position. Option B is not sufficient as footnotes alone do not provide enough clarity for investors and stakeholders. Option D may not be accurate as not all receivables from officers, employees, or affiliates may qualify as trade notes or accounts receivable.

What Is the Preferable Presentation of Accounts Receivable from Officers