When a Portion of Inventories Has Been Pledged as Security

question 69

Multiple Choice

When a portion of inventories has been pledged as security on a loan,

• A) the value of the portion pledged should be subtracted from the debt.
• B) an equal amount of retained earnings should be appropriated.
• C) the fact should be disclosed but the amount of current assets should not be affected.
• D) the cost of the pledged inventories should be transferred from current assets to noncurrent assets.

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Definitions:

Auto Theft

The illegal action of taking another's vehicle without permission with the intent to permanently or temporarily deprive the owner of it.

Use Of Violence

The intentional application of force to harm, intimidate, or control others.

Joyriding

The act of driving a vehicle without the owner's permission, typically done for thrill or enjoyment, rather than for the purpose of committing a theft.

Commit Another Crime

The action of engaging in illegal activities or offenses after previously offending.