If a Company Engages in Off-Balance Sheet Financing, Generally the Effect

question 38

Multiple Choice

If a company engages in off-balance sheet financing, generally the effect is:
I. to cause assets to be understated.
II. to increase leverage ratios.
III. to increase cash flows.
IV. to cause liabilities to be understated.

• A) I, II, III and IV
• B) I, III and IV
• C) I and IV
• D) IV only

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