A Company Has a Debt Contract in Place Which Requires

question 56

Multiple Choice

A company has a debt contract in place which requires that the company's working capital (ratio of current asset to current liabilities) must never fall below 2.As balance date approaches,the company estimates that the working capital ratio will be 1.9 and the company may default on its debt contract unless remedial action is taken.Which of the following action(s) will increase the company's working capital at balance day?

• A) revalue plant and equipment by 10%
• B) increase allowance for doubtful debts by 10%
• C) increase provision for warranty claims by 10%
• D) accelerate recognition of credit sales by 10%

---

Definitions:

Biomes

Large ecological zones on Earth's surface, characterized by distinct types of vegetation, wildlife, and climate conditions.

Environmental Changes

Alterations to the natural environment caused by natural phenomena or human activities, affecting ecosystems, climate, and natural resources.

Extinction

is the process through which a species, genus, or family ceases to exist due to the death of its last member, often a result of environmental factors, human activities, or evolutionary changes affecting the species.

Premature Extinction

The early disappearance of a species from Earth, occurring before natural expectations due to human actions or environmental changes.