Apply these same concepts to real life and the current trade wars and tariffs going on

Accounts Receivable ( Professor Follow up on student Post)

To clarify, per GAAP, you recognize the revenue from the sale at the time it’s made, regardless if you collect the cash or not. Uncollected sales are booked to the balance sheet as an account receivable. When a customer is using terms, that’s also called “trade credit” because you are extending someone “credit” or free use of your money. An increase in A/R is a “use” of cash since it reflects cash not readily available to you for your business. You may encounter this type of question on a future individual assignment (wink wink). From a real life perspective, you want to collect the cash as soon as possible – if you think of lending a friend money, the longer they don’t pay you back, the less likely you will ever collect on that debt.

So, if a company were to tighten their credit policy, what impact would you expect to see on (a) sales and (b) A/R?

#8 Purchasing Power Parity [LO2] ( Professor Follow up on Student Post)

Nice discussion and a good reference back to our text. We can actually apply these same concepts to real life and the current trade wars and tariffs going on. Instead of inflation, consider additional taxes and tariffs. Purchasing power parity is affected by several risk factors including geo political. Thoughts?

……………………..Answer preview…………………

The credit standards established by a firm usually exhibit a direct-bearing on the related costs and revenues made from receivables. If a company tightens its credit policy, it basically makes increased credit sales more selectively. The company ends up selling less and definitely makes fewer sales on credit. In either way, profits are significantly affected………………

APA

282 words

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