Which of the Following Indicators Is Not an Example of an Event

question 23

Multiple Choice

Which of the following indicators is not an example of an event that casts doubts on the going concern status of the business?

• A) a court decision with immaterial damages against the business
• B) major uninsured fire damage
• C) recoverability of trade receivables during a recession
• D) denial of a significant credit line

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business.

Current Liabilities

Current liabilities are financial obligations a company is due to pay within one year, including accounts payable, short-term debts, and other similar liabilities.

Proportion

A segment, piece, or amount looked at in relation to the entirety.

Acid-test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its quick assets, providing insight into its short-term liquidity without relying on inventory assets.