Which of the Following Is Correct Regarding the Treatment of Short-Term

question 16

Multiple Choice

Which of the following is correct regarding the treatment of short-term obligations expected to be refinanced?

• A) If an obligation has actually been refinanced or a firm refinancing agreement is in place by the date financial statements are issued, then reclassify the short-term obligation as long-term
• B) Classify the short-term obligation as long-term if the obligation has been refinanced by the balance sheet date.
• C) Classify the short-term obligation as long-term if the obligation has been refinanced by the date the financial statements are issued
• D) There is no provision for reclassifying short-term obligations expected to refinanced as long-term obligations under international accounting standards.

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Definitions:

Sarbanes-Oxley Act

A U.S. federal law aimed at protecting investors from fraudulent accounting activities by corporations, enacted in 2002 in response to major corporate and accounting scandals.

Chief Financial Officer

A high-ranking executive responsible for managing the financial actions of a company, including financial planning, risk management, and financial reporting.

Annual Reports

Comprehensive reports issued yearly by companies to provide shareholders and other interested parties with detailed information on financial performance and operations.

Private Placement

The sale of securities or investment instruments directly to a select group of investors rather than through a public offering.