Management Can Take Deliberate Steps to Produce a Financial Statement

question 28

Multiple Choice

Management can take deliberate steps to produce a financial statement that presents a better current ratio at the balance sheet date than the average, or normal, current ratio during the rest of the year. Analysts refer to such actions as window dressing:

• A)near the end of its accounting period a firm might delay normal purchases on account.
• B)hasten the collections of a loan receivable, classified as noncurrent assets, and use the proceeds to reduce current liabilities.
• C)near the end of its accounting period a firm might accelerate normal purchases on account.
• D)hasten the collections of a loan receivable, classified as current assets, and use the proceeds to reduce long-term liabilities.
• E)choices a and b.

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Definitions:

Structure

The arrangement of atoms within a molecule, determining the molecule's shape and chemical behavior.

P-aminobenzoic Acid

A white crystalline substance that is a part of the vitamin B complex and is used in sunscreen products.

Structure

The arrangement or organization of something's parts or elements which defines its nature or function.

Aromatic

Organic compounds that contain one or more benzene rings or similar structures, characterized by a high degree of chemical stability and unique reactions.