Evaluating the Quality of Receivables

question 56

Essay

Evaluating the quality of receivables
(a. )The 2018 annual report of Modern Books,a publicly traded corporation,reports accounts receivable (net of allowance for doubtful accounts),of $190,714 as of February 28,2018.What assurance do readers of Modern Books ' annual report have that these receivables really exist and are not fictitious assets recorded to make the balance sheet "look good"?
(b. )The accounts receivable turnover rate is frequently used in evaluating the liquidity of accounts receivable.How is the accounts receivable turnover rate computed? What type of information does the accounts receivable turnover rate provide?

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Definitions:

Benadryl

An over-the-counter medication known generically as diphenhydramine, used to relieve symptoms of allergy, hay fever, and the common cold.

Decimals

Numerical symbols used in the decimal number system to represent fractions of ten, fundamental in mathematics for expressing precise values.

Mixed Fraction

A whole number and a fraction combined into one “mixed” number.

Improper Fraction

A fraction where the numerator (the top number) is greater than or equal to the denominator (the bottom number).