Which of the Following Statements Is CORRECT

question 64

Multiple Choice

Which of the following statements is CORRECT?

• A)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."
• B)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."
• C)Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase fixed assets is an example of "window dressing."
• D)Using some of the firm's cash to reduce long-term debt is an example of "window dressing."
• E)"Window dressing" is any action that does not improve a firm's fundamental long-run position and thus increases its intrinsic value.

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Definitions:

Analyze the Situation

The process of examining a scenario or problem in detail to understand its components and implications.

Linear

Describes something that is arranged in or extends along a straight or nearly straight line.

Nonlinear

Not following a straight, direct, or sequential path, often referring to narratives, processes, or thinking that jumps around in time or topic.

Clear, Vivid Language

Language that is straightforward and expressive, making it easy for the reader to visualize and understand the message.