Misstating Financial Information in One Period to Prevent a Loan

question 27

True/False

Misstating financial information in one period to prevent a loan being called for violating debt to equity covenants is okay as long as the violation is reversed in the next period.

---

Definitions:

Ending Inventory Cost

The total value of all goods available for sale at the end of an accounting period, calculated using a specific inventory costing method like FIFO or LIFO.

Physical Inventory

A process of counting and verifying the actual inventory on hand at a specific time, typically used to validate inventory records and adjust discrepancies.

Periodic System

An inventory tracking system that updates inventory balances after a specific period, based on physical inventory counts.

First-In

Often used in the context of inventory management, "First-In" refers to goods that were acquired or produced first being sold, used, or disposed of first.