In "Off-Balance-Sheet Inventory Financing," Verity Distillery Used the Product Repurchase

question 12

Multiple Choice

In "Off-Balance-Sheet Inventory Financing," Verity Distillery used the product repurchase ploy to ________.

• A)overstate assets and understate liabilities by borrowing money and not recording the liability
• B)increase owners' equity by recording the sale of inventory without recording any cost of goods sold
• C)understate assets and understate liabilities by borrowing money through an undisclosed related party transaction and disguising it as a sale
• D)understate assets and understate liabilities by loaning money to its officers

---

Definitions:

Probate

A legal process that deals with the assets and debts of a deceased person, ensuring proper distribution according to the will or the law.

Resided

To have been domiciled or located in a particular place.

Trust's Principal

The original assets placed into a trust by the grantor, excluding any income or appreciation generated by those assets.

Investment Costs

Investment costs include all the expenses associated with acquiring an asset, including purchase price, broker fees, setup costs, and any other costs necessary to bring the asset to a usable state.