Which of the Following Is an Example of a Covenant

question 15

Multiple Choice

Which of the following is an example of a covenant?

• A)Requirement to maintain a minimum level of current ratio
• B)Requirement to maintain a maximum level of net worth
• C)No requirement to limit dividend payments
• D)All of the above

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Definitions:

Ledger Account

A ledger account is a record used to store and summarize the financial transactions pertaining to a particular aspect of a business, such as assets, liabilities, equity, revenues, or expenses.

Petty Cash

A small amount of cash kept on hand for making immediate payments for miscellaneous small expenses.

Cash on Hand

The amount of liquid currency that a person or business has available for immediate use.

Sarbanes-Oxley Act

A U.S. law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures, prompted by financial scandals.