You Observe That a Company's Current Ratio Has Increased Significantly

question 13

Multiple Choice

You observe that a company's current ratio has increased significantly. What could this indicate?

• A) Contingent liabilities are not recorded
• B) Accounts payable is understated
• C) Expenses are inappropriately capitalized as assets
• D) Fixed assets are overstated

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Definitions:

Organizational Meeting

The initial meeting held by the incorporators or directors of a new corporation to complete the formation of the corporation and to establish its internal affairs.

Incorporation Process

The series of steps required to legally create a corporation, including the filing of articles of incorporation with the relevant state authority and compliance with regulatory requirements.

Charter Issued

The granting of legal authorization or a set of rights and privileges from a government or authority to create and operate an organization.

Incorporator

An individual or entity that establishes and files the legal documentation required to form and register a corporation.