A Company Must Do Which of the Following, If a Company

question 77

Multiple Choice

A company must do which of the following, if a company maintains a material compensating balance of cash?

• A) Disclose the compensating account arrangement in financial statements.
• B) Close out the balance prior to year-end.
• C) Tie balances to debt covenants.
• D) Provide a lockbox for appropriate line-of-credit draws.

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Definitions:

Kantianism

Kantianism is a philosophical doctrine based on the works of Immanuel Kant, emphasizing the principles of universal morality, duty, and the importance of intention behind actions.

Rights Theory

A framework in ethics and philosophy that holds certain rights as fundamentally important to human beings, which must be respected and protected.

Deontological Theory

An ethical framework that judges the morality of an action based on the action's adherence to rules or duties, rather than the consequences of the action.

Utilitarian Theory

A theory in ethics and philosophy that actions are right if they are useful or for the benefit of a majority.