Which of the Following Is Correct Regarding the Treatment of Short-Term

question 20

Multiple Choice

Which of the following is correct regarding the treatment of short-term obligations expected to be refinanced?

• A) If an obligation has actually been refinanced or a firm refinancing agreement is in place by the date financial statements are issued,then reclassify the short-term obligation as long-term
• B) Classify the short-term obligation as long-term if the obligation has been refinanced by the date the financial statements are issued
• C) Classify the short-term obligation as long-term if the obligation has been refinanced by the balance sheet date.
• D) There is no provision for reclassifying short-term obligations expected to refinanced as long-term obligations under international accounting standards.

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Definitions:

Inferior Good

A product whose demand decreases as consumers' income levels increase, opposite to normal goods.

Income Rises

An increase in the amount of money received by individuals or households, often measured on an annual basis.

Complementary Goods

Products or services that are often used together, where the increase in demand for one leads to an increase in demand for the other.

Market Demand

The total quantity of a good or service that all consumers are willing to purchase at a given price over a specified period.