Which of the Following Conditions or Events Does Not Signal

question 19

Multiple Choice

Which of the following conditions or events does not signal an entity's inability to pay its debts as they become due?

• A) Recurring operating losses.
• B) Drops in the closing stock prices on a recognized stock exchange.
• C) Working capital deficiencies.
• D) Loan defaults.
• E) Negative cash flows from operating activities.

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Definitions:

Foreign Exchange Gain

A profit resulting from changes in the exchange rate between the base currency and the foreign currency in which a transaction is denominated.

Exchange Loss

A financial loss that occurs when the value of a currency decreases relative to another currency in transactions involving foreign exchange.

Year End

The end of the financial year for a company, marking the close of the reporting period.

Settlement Date

The date on which a trade is finalized, and the buyer must make payment and the seller must deliver the asset.