Which of the Following Statements Is Correct

question 107

Multiple Choice

Which of the following statements is correct?

• A)Current liabilities are initially recorded at the amount of their principal plus interest.
• B)Current liabilities are those liabilities due within the shorter of one year or one operating cycle.
• C)Liquidity refers to the ability to pay all debts within one year.
• D)Current liabilities affect working capital and the cash flows from operating activities.

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Definitions:

Price

The amount of money or value exchanged for the provision or acquisition of a good or service.

Surplus Amount

The excess of quantity supplied over quantity demanded in a market, often leading to lower prices.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases.

Income Increases

The rise in the amount of money received, typically on a regular basis, for work or through investments.