04 Feb You and three friends have decided to go into the
You and three friends have decided to go into the landscape business for the summer to earn money to pay for your schooling in the fall. Your first step was to sign up customers to satisfy yourselves that the business had the potential to be profitable. Next, you planned to go to the bank to borrow money to buy the equipment you would need. After considerable effort, your group obtained contracts from customers for 200 residences for the summer. One of your partners wants to prepare a balance sheet showing the value of the contracts as an asset. She is sure that you will have no trouble with borrowing the necessary funds from the bank on the basis of the proposed balance sheet. Required Explain to your friend why the commitments (signed contracts) from customers cannot be recognized as assets. What suggestions do you have that might assist your group in borrowing the necessary funds?
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