You assume too much. Who's to say he didn't instruct the accountant to cook the books? That seems the most likely scenario to my cynical mind. What kind of accountant would make that kind of basic error?
It beggars belief that the guy could run a successful business for 20 years, but could not understand the difference between receivables and booked work. He was probably boosting cashflow to keep the banks happy, then one day they figured it out and shut him down. Otherwise he would have surely been able to get loans for that vital "equipment".
Ah well, happens all the time. I feel sorry for the guy but he should have been more careful.