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:

Ethics

The philosophical study of morality.

Normative Theory

A framework that describes how things should be or how societal norms and standards guide individual actions and institutional practices.

Leader Position Power

The authority and influence possessed by a leader, derived from their official status or position within an organization.

Task Structure

Refers to the defined organization, clarity, and procedures of a task, including how its goals are supposed to be achieved.