The Client May Use a Variety of Methods to Understate

question 69

Multiple Choice

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

• A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
• B)Designing off-balance sheet debt agreements with the sole purpose of keeping the debt off the books of the company.
• C)Failing to disclose loan covenants on long-term agreements.These loan covenants may restrict dividend payments or limit the amount of additional debt taken on by the company.
• D)Failing to disclose special arrangements,such as transactions with special purpose entities.
• E)Failing to disclose nonrelated-party transactions.
• F)both A and B
• G)both B and C
• H)both D and E

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Definitions:

General Price Level

An overall measure of the cost of goods and services in an economy at a specific time.

Macroeconomics

The branch of economics that studies the behavior and performance of an economy as a whole, focusing on aggregate changes.

Individual Units

Individual units refer to the single, distinct items or entities that can be counted or measured, often used in reference to products or components in economics and various sciences.

Household

A basic economic unit consisting of all the individuals who live together and make joint decisions.