What Is the Relationship Between Current Liabilities and a Company's

question 39

Multiple Choice

What is the relationship between current liabilities and a company's operating cycle?

• A) Liquidation of current liabilities is reasonably expected within the company's operating cycle (or one year if less).
• B) Current liabilities are the result of operating transactions.
• C) Current liabilities can't exceed the amount incurred in one operating cycle.
• D) There is no relationship between the two.

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Definitions:

Circular Shareholdings

A corporate structure where companies possess shares in one another in a closed loop, complicating the assessment of true economic ownership and control.

Corporations Act

Legislation that governs the operations of corporations, their formation, financial reporting, governance, and dissolution, often detailing the legal responsibilities of a company’s management and board of directors.

Non-controlling Interest

The portion of equity ownership in a subsidiary not held by the parent company, reflecting interests not directly controlled by the parent.

Parent Entity

A company that holds a controlling interest in another company, giving it control of its operations and policies.