A New Accounting Standard Requires the Provision of Liabilities for Share-Based

question 74

Multiple Choice

A new accounting standard requires the provision of liabilities for share-based payments that has implications in the firm's debt-to-equity ratio.Which of the following accounting policy choices will reduce the probability of the firm violating debt covenants in a debt agreement?

• A) Expense all research and development costs.
• B) Shift from FIFO to weighted average inventory method.
• C) Shift from straight-line to accelerated method of depreciation.
• D) Shift from cost to revaluation method in accounting for land and buildings.

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Definitions:

Cellular Respiration

The metabolic process by which cells produce energy in the form of ATP from glucose, typically occurring in the presence of oxygen.

Substrate

A substance or surface on which an enzyme acts or where a chemical reaction occurs.

Citric Acid Cycle

A series of chemical reactions used by all aerobic organisms to release stored energy through the oxidation of acetyl-CoA derived from carbohydrates, fats, and proteins into carbon dioxide and chemical energy.

ATP

Adenosine triphosphate, a high-energy molecule that stores and supplies the cell with needed energy for various functions.