Which of the Following Actions Is an Example of "Window

question 40

Multiple Choice

Which of the following actions is an example of "window dressing?"

• A) Borrowing by using short-term notes payable and then using the proceeds to retire long-term debt.
• B) Borrowing on a long-term basis and using the proceeds to retire short-term debt.
• C) Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase fixed assets.
• D) Using some of the firm's cash to reduce long-term debt.
• E) Any action that does not improve a firm's fundamental long-run position and thus increases its intrinsic value.

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Definitions:

Stock Options

Contracts that give the holder the right, but not the obligation, to buy or sell a stock at a specific price before a certain date.

High-Growth Companies

Entities that experience significantly higher rates of growth compared to the average growth rate of their industry.

IFRS

The International Financial Reporting Standards are globally accepted rules intended to bring consistency to accounting language, practices, and statements across all industries.

Preference Shares

Shares that give holders a priority over common stockholders in terms of receiving dividends and assets in the event of a liquidation, often without voting rights.