Which of the Following Is Not a Situation Which Might

question 95

Multiple Choice

Which of the following is not a situation which might lead a firm to hold marketable securities:

• A)The firm has purchased a fixed asset which will require a large write-off of depreciable expense.
• B)The firm must meet a known financial commitment, such as financing an ongoing construction project.
• C)The firm must finance seasonal operations.
• D)The firm has just sold long-term securities and has not yet invested the proceeds in earning assets.
• E)None of the above (all of the situations might lead the firm to hold marketable securities).

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Definitions:

IASB

The International Accounting Standards Board, an independent body that develops and approves International Financial Reporting Standards (IFRS).

FASB

Stands for Financial Accounting Standards Board, which is responsible for establishing and improving financial accounting and reporting standards in the United States.

Note Receivable

A written promise to receive a specific amount of money at a future date.

Cash To Be Received

Expected cash inflows from various sources, such as sales, loans, and investments, not yet received but anticipated in the future.