Which of the Following Statements Is CORRECT

question 38

Multiple Choice

Which of the following statements is CORRECT?

• A) "Window dressing" is any action that improves a firm's fundamental, long-run position and thus increases its intrinsic value.
• B) Borrowing by using short-term notes payable and then using the proceeds to retire long-term debt is an example of "window dressing." Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase additional inventories is another example of "window dressing."
• C) Borrowing on a long-term basis and using the proceeds to retire short-term debt would improve the current ratio and thus could be considered to be an example of "window dressing."
• D) Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase additional inventories is an example of "window dressing."
• E) Using some of the firm's cash to reduce long-term debt is an example of "window dressing."

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Definitions:

Variable Costs

Expenses that change in proportion to the level of production or business activity.

Level of Activity

A measure of the volume of work or production capacity a business entity engages in over a specific period.

Employee Salaries and Wages

Payments made to employees for their labor, including both fixed salaries and variable wages.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for more accurate forecasting and planning.