ACCT 370 Midterm review
The Mick Company reported a LIFO cost of goods sold for the year of $100,000. The LIFO reserve decreased by $30,000 for the year. An estimate of the cost of goods sold under FIFO is: $70,000. $160,000. $200,000. $130,000.
$130,000.
On January 2, 20X1, Jensen Corporation sells equipment it manufactured to Lewisburg Fabricators in exchange for an $80,000 note due in five years. The note bears no stated interest rate, but requires the entire $80,000 to be repaid at the end of five years. Jensen recently sold the same equipment to another company for $54,447. When Lewisburg Fabricators sought bank financing for this purchase the company was offered the funds at 8%, but decided to let Jensen hold the note. What will be the balance in the Notes Receivable—Lewisburg Fabricators account at the end of 20X2? $80,000 $54,447 $58,802 $63,507
$63,507
Firms must provide detailed disclosure of three broad executive pay categories. Which of the following is not one of these categories? A) Costs incurred by the corporation for executive travel, entertainment, and other "expense account" items B) Compensation for the last fiscal year and the two preceding years C) Holdings of equity-related interests that relate to compensation D) Retirement and other postemployment compensation
A) Costs incurred by the corporation for executive travel, entertainment, and other "expense account" items
Which of the following is not correct with respect to the debt to assets ratio? A) Cyclical companies (those whose sales fluctuate widely due to changing economic conditions) generally have a higher debt to assets ratio. B) The percentage of long-term debt to assets would be higher for a utility company than for a retailer. C) Cyclical companies (those whose sales fluctuate widely due to changing economic conditions) generally have a smaller debt to assets ratio. D) A high debt ratio increases long-term solvency risk.
A) Cyclical companies (those whose sales fluctuate widely due to changing economic conditions) generally have a higher debt to assets ratio.
Which of the following statements does not apply to the principal/agent relationship under ASC Topic 606 guidance for revenue recognition? A) Inventory risk is not an important factor in determining the relationship. B) An agent may recognize revenue when its performance obligation to the principal is satisfied. C) A principal recognizes revenue for the gross amount paid by the customer. D) An agent reports revenue only for the net amount retained.
A) Inventory risk is not an important factor in determining the relationship.
Which of the following is not an accurate statement regarding the compensation committee? A) It is comprised of both internal and external directors. B) It selects the annual or multiyear performance goals. C) It may adjust a calculated award up or down at its discretion. D) It selects the performance metrics used.
A) It is comprised of both internal and external directors.
Which of the following statements is not true regarding cash flow from operating activities? A) The direct method begins with net income and then shows the differences between operating cash flow and net income. B) Each line item in a direct method Statement of Cash Flows is actually a cash flow. C) Most firms use the indirect method for presentation. D) There are two methods for presenting cash flow from operating activities.
A) The direct method begins with net income and then shows the differences between operating cash flow and net income.
Which of the following statements is not true regarding the adoption of ASC Topic 606 guidance for revenue recognition? A) When using the cumulative approach, the prior three years of financial statements need to be restated. B) Under the retrospective approach, each period presented is restated to what the financial statements would have been had the new standard always been in place. C) Upon adoption, entities can choose between the retrospective approach or the cumulative effect approach. D) Under the cumulative effect, the firm determines how the balance sheet would differ as of the first day of the year of adoption.
A) When using the cumulative approach, the prior three years of financial statements need to be restated.
Cash collected from customers can be derived: A) by appropriately adjusting revenue for changes in accounts receivable. B) by analyzing changes in the Accounts Payable balance. C) by analyzing changes to the reserve for doubtful accounts. D) by appropriately adjusting revenue for changes in accounts payable.
A) by appropriately adjusting revenue for changes in accounts receivable.
Although a company's earnings are important in financial statement analysis, with respect to credit evaluations and lending decisions an analysis of its cash flows is: A) central. B) only important if the company has a high debt/equity ratio. C) optional. D) required by banking regulations.
A) central.
Income statements are classified into sections to: A) distinguish between sustainable and transitory income. B) distinguish between book income and taxable income. C) separate real income from book income. D) separate revenue recognized from deferred revenue.
A) distinguish between sustainable and transitory income.
Investors who follow a fundamental analysis approach: A) estimate the value of a stock by assessing the amount, timing, and uncertainty of future cash flows that will accrue to the issuing company. B) assess the company's ability to raise additional cash by selling assets, issuing stock, or borrowing more. C) determine the value the company's assets would yield if sold individually. D) assess the company's ability to meet its debt-related financial obligations.
A) estimate the value of a stock by assessing the amount, timing, and uncertainty of future cash flows that will accrue to the issuing company.
A company manages a large portfolio of marketable securities and sells only stocks with substantial gains in poor income years or sells only stocks with substantial losses in good income years. This strategy is an indication of: A) income smoothing. B) unstable portfolio management. C) violating security trading laws. D) securities fraud.
A) income smoothing.
Joe Carie, head accountant, is using the indirect method and the account balance from the balance sheet and income statement to prepare a statement of cash flows. He notices that the Retained Earnings account increased from the beginning of the year. This information is used to: A) increase cash flow from operations as it signifies a net income. B) decrease cash flow from operations as it indicates a net loss. C) increase cash flow from financing as it indicates receipt of payments from customers. D)decrease cash flow from investing as it indicates payment of debt.
A) increase cash flow from operations as it signifies a net income.
The LIFO reserve disclosure is required because LIFO inventory costs are: A) lower than FIFO inventory costs. B) usually of no consequence. C) higher than FIFO inventory costs. D) equal to FIFO inventory costs.
A) lower than FIFO inventory costs.
Investing activities include the cash effects of: A) purchasing and disposing of productive assets used in production of revenue. B) selling stocks and bonds to raise capital to purchase land. C) borrowing and repaying loans used to purchase equipment. D) producing and delivering goods and services.
A) purchasing and disposing of productive assets used in production of revenue.
Which one of the following equations explains why successive balance sheets can be used to prepare a firm's cash flow statement? A) Δ Cash = Δ Liabilities − Δ Noncash assets + Δ Stockholders' equity B) Δ Cash = Δ Liabilities + Δ Stockholders' equity C) Cash - Noncash assets = Liabilities − Equity D) = Liabilities − Equity
A) Δ Cash = Δ Liabilities − Δ Noncash assets + Δ Stockholders' equity
Which one of the following contingencies requires financial statement disclosure? A) A lawsuit that the firm's attorneys believe will probably be settled for $75,000. B) A reasonably possible loss on a lawsuit that the firm's attorneys believe will be settled for $100,000. C) A lawsuit that the firm's attorneys believe will be dropped. D) A reasonably possible loss on a lawsuit that the firm's attorneys cannot estimate the loss.
B) A reasonably possible loss on a lawsuit that the firm's attorneys believe will be settled for $100,000.
When assessing a company's credit risk: A) The assessment involves looking only at the operating and cash conversion cycles. B) Both liquidity and solvency must be reviewed. C) Analysts use only financial ratios and do not need to review the statement of cash flows. D) Analysts use only the statement of cash flows.
B) Both liquidity and solvency must be reviewed.
Which of the following people outside the company do not demand financial statement information as a key input? A) Suppliers and Lenders. B) Competitors. C) Government and Regulatory Agencies. D) Customers.
B) Competitors.
Which is not correct regarding Regulation Fair Disclosure (Reg FD)? A) It limits what management can say in private conversations with analysts and investors. B) It does not limit what management can say in private conversations with analysts or investors. C) It helps level the playing field between individual and institutional investors. D) It was passed by the SEC.
B) It does not limit what management can say in private conversations with analysts or investors.
With respect to financial leverage which of the following is not a valid statement? A) Financial leverage makes bad years look worse by decreasing the shareholder return. B) Return on assets will generally equal return on common equity except when the company has no long-term debt. C) Financial leverage is beneficial when the company earns more than the incremental after-tax cost of debt. D) Financial leverage makes good years look better by increasing the shareholder return.
B) Return on assets will generally equal return on common equity except when the company has no long-term debt.
With respect to executive compensation, which statement is not valid? A) Compensation packages are designed to minimize conflicts of interest. B) Stock returns are the best way to align managers' and owners' interests since management's actions control the share price in both the short and long term. C) Use of accounting earnings should not be used due to its reliance on valuations that involve subjectivity and judgments. D) Executive compensation components are generally linked to stock returns and/or financial performance measures.
B) Stock returns are the best way to align managers' and owners' interests since management's actions control the share price in both the short and long term.
To obtain a better current price, the net present value of future growth opportunities (NPVGO) can be calculated and: A) subtracted from the price per share calculated from the P/E ratio. B) added to the price per share calculated from the P/E ratio. C) multiplied by the price per share calculated from the P/E ratio. D) divided into the price per share calculated from the P/E ratio.
B) added to the price per share calculated from the P/E ratio.
The U.K. Equity account "Hedging reserve" is reported on a U.S. GAAP balance sheet as A) revaluation reserve. B) an accumulated other comprehensive income account. C) capital reserve. D) capital in excess of par.
B) an accumulated other comprehensive income
On balance sheets prepared in accordance with U.S. GAAP: A) both tangible and intangible long-lived assets can be revalued upward periodically. B) assets are generally listed from most liquid to least liquid. C) liabilities are generally netted against assets. D) assets are generally listed from least liquid to most liquid.
B) assets are generally listed from most liquid to least liquid.
International Financial Reporting Standards (IFRS) are A) seldom different than those issued by the FASB. B) built on broad principles. C) narrowly defined, detailed standards. D) rules-based.
B) built on broad principles.
Joe Carie, head accountant, is using the indirect method and the account balance from the balance sheet and income statement to prepare a statement of cash flows. An increase in the Computer Equipment account would: A) increase cash flow from operating activities. B) decrease cash flow from investing activities. C) decrease cash flow from financing activities. D) increase cash flow from investing activities.
B) decrease cash flow from investing activities.
A lender's requirement for a borrower to maintain a certain level of fixed charge coverage: A) directly limits the borrower's ability to pay dividends. B) indirectly limits the borrower's ability to pay dividends. C) indirectly enhances the borrower's ability to pay dividends. D) directly enhances the borrower's ability to pay dividends.
B) indirectly limits the borrower's ability to pay dividends.
Discretionary accounting accruals are: A) noncash financial statement adjustments, which accrue only expenses. B) noncash financial statement adjustments, which accrue revenue or expenses. C) cash financial statement adjustments, which accrue only revenue. D) cash financial statement adjustments, which accrue revenue or expenses.
B) noncash financial statement adjustments, which accrue revenue or expenses.
Muenster Company sells its network servers with a warranty than includes preventive maintenance. Muenster should account for the warranty as a(n): A)integral part of the equipment sales. B) separate performance obligation. C) accrued expense. D) separate contract.
B) separate performance obligation.
The only authoritative source of U.S. GAAP is created by FASB and exists in a single database known as: A) FASB financial reporting standards. B) the accounting standards codification. C) the accounting standards database. D) the converged accounting standards.
B) the accounting standards codification.
When the income effect of a LIFO liquidation is material, the SEC requires that the 10-K report disclose: A) this fact following a prescribed disclosure format. B) the dollar impact of LIFO liquidation on net income. C) the dollar impact of LIFO liquidation on the year-end inventory balance. D) the dollar impact of LIFO liquidation on both a pre-tax and after-tax basis.
B) the dollar impact of LIFO liquidation on net income.
Analysts try to remove holding gains from reported FIFO income because A) the code of professional ethics to which they must comply requires that they do so if possible. B) they are potentially unsustainable. C) they are always unsustainable. D) holding gains understate management's true performance.
B) they are potentially unsustainable.
Which of the following statements is not true? The direct method presents cash inflows and outflows. A) The direct method presents cash inflows and outflows. B) The indirect method begins with net income. C) Cash flows from operating activities will differ between the direct and indirect methods. D) Most firms use the indirect method to prepare the statement of cash flows.
C) Cash flows from operating activities will differ between the direct and indirect methods.
Which of the following statements is false regarding credit risk analysis? A) Certain financial statement ratios are very useful in predicting loan default. B) A simple alternative to credit risk analysis is to rely on credit reports issued by third parties. C) Credit risk is not affected by the aggressive application of accounting standards since cash flows are not impacted by financial reporting choices. D) A comprehensive credit risk analysis involves evaluating and summarizing the various individual risks associated with a loan.
C) Credit risk is not affected by the aggressive application of accounting standards since cash flows are not impacted by financial reporting choices.
Preparing comprehensive financial statement forecasts involves six steps. Among these steps are all the following except: A) Forecast depreciation expense and tax expense for each period. B) Forecast sales revenue for each period in the forecast horizon. C) Forecast the market price per share for the company's common stock for each period. D) Forecast the company's financial structure and dividend policy for each period.
C) Forecast the market price per share for the company's common stock for each period.
Which of the following statements regarding inventory accounting is false? A) Managers can avoid the negative tax implications of LIFO liquidations by purchasing enough inventory before year-end to bring inventory up to the level at the start of the year. B) The size of the difference between cost of goods sold under FIFO and cost of goods sold under replacement cost depends on the amount of change in input cost as well as the inventory turnover. C) The tax advantage of LIFO is that it provides a lower net income than FIFO during periods of rising prices and decreasing inventory quantities. D) To avoid providing an incentive for managers to engage in intentional LIFO liquidations, bonus contracts should subtract out any profits from LIFO liquidations.
C) The tax advantage of LIFO is that it provides a lower net income than FIFO during periods of rising prices and decreasing inventory quantities.
Under the new revenue recognition guidelines in ASC Topic 606, which of the following statements is not true regarding performance obligations satisfied over time? A) Usable input measures include labor hours, costs incurred, and time elapsed. B) Output and input methods may be used for measurement purposes. C) To obtain quality measurement, input methods must always be closely related to the transfer of the goods or services to the customer. D) The firm must determine at each reporting date the extent to which the performance obligation has been satisfied.
C) To obtain quality measurement, input methods must always be closely related to the transfer of the goods or services to the customer.
The interest rate charged on bank loans must be sufficient to cover all the following except: A) the costs of administering, monitoring, and servicing the loan. B) lender's cost of borrowing funds. C) a risk premium when loans are personally guaranteed by the borrower. D) a premium for exposure to default risk. Incorrect
C) a risk premium when loans are personally guaranteed by the borrower.
Borden Construction entered into the following contracts with Lovely Landscaping, LLP: (1) construct a paver patio, (2) plant trees, and (3) landscape planting beds for a new home construction project. Lovely Landscaping should treat the contracts: A) None of the answer choices are correct. B) as three separate contracts C) as a single contract D) as two contracts—one for hardscaping and one for landscaping.
C) as a single contract
If a transfer of receivables is actually a borrowing but is erroneously treated as a sale, A) ratios like debt-to-equity are consequently distorted by the overstatements. B) both assets and equity are understated. C) both assets and liabilities are understated. D) both assets and liabilities are overstated.
C) both assets and liabilities are understated.
GAAP requires firms to report comprehensive income: A) at the end of the income statement. B) as one separate statement of comprehensive income. C) in a statement that is displayed with the same prominence as other financial statements. D) in the statement of changes in stockholders' equity.
C) in a statement that is displayed with the same prominence as other financial statements.
A consolidated balance sheet: A) reports separately the net assets of the parent company and its subsidiaries. B) Includes the net assets of the parent company and all components in which it owns more than 75% of the outstanding voting stock. C) includes the net assets of the parent company and all of its subsidiaries. D) includes the net assets of only the subsidiary companies.
C) includes the net assets of the parent company and all of its subsidiaries.
If an inventory error is discovered during the reporting year, A) a running inventory balance should be implemented immediately. B) a certification of inventory is required. C) it should be corrected immediately. D) it should be deferred and discussed with the external auditors.
C) it should be corrected immediately.
Non-interest bearing notes are initially recorded at A) maturity value because they bear no interest. B) future value, based on the prevailing interest for loans of this type. C) present value, based on the prevailing interest for loans of this type. D) historical cost.
C) present value, based on the prevailing interest for loans of this type.
Professional analysts need information on a company's future earnings and cash flow to evaluate audit vulnerabilities, to assess debt repayment prospects and to: A) indemnify creditors against losses. B) certify that no fraud exists in the company. C) value its equity securities. D) certify good values in the stock market.
C) value its equity securities.
Which of the following statements is false regarding traditional lending products? A) A term lending agreement has an original maturity of more than one year with maturities ranging from two to five years being the most common. B) The written agreement between the between the borrowing company and its lenders is referred to as the indenture. C) A call provision allows the borrowing company to repurchase part or all the debt at a stated price over a specific period. D) A bond that has collateral to protect the bondholder is referred to as a debenture bond.
D) A bond that has collateral to protect the bondholder is referred to as a debenture bond.
Adjusting entries are used in all but which of the following situations? A) Prepayments. B) Prepayments, Deferred Revenue, Accrued Expenses, Accrued Revenue. C) Accrued Revenue and Expenses. D) Deferred Revenue and Expenses.
D) Deferred Revenue and Expenses.
Under ASC Topic 606 for revenue recognition, which of the following statements is not accurate regarding performance obligations? A) Firms must disclose warranties provided. B) Firms must disclose qualitative information about their performance obligations. C) Firms must disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations. D) Firms are not required to disclose any judgments used to apply the standard.
D) Firms are not required to disclose any judgments used to apply the standard.
Which of the following situations does not lead to default of a loan contract? A) Impairment of capital B) Failure to abide by a covenant C) Failure to pay other debts when due D) Paying interest and principal when due
D) Paying interest and principal when due
Which of the following is a true statement? A) Expenses increase owners' equity and decrease liabilities. B) Revenue decreases owners' equity and expenses increase owners' equity. C) Revenue decreases owners' equity and increases liabilities. D) Revenue increases owners' equity and expenses decrease owners' equity.
D) Revenue increases owners' equity and expenses decrease owners' equity.
Which of the following statements is false regarding the FASB'S view on valuation? A) The FASB believes that a reliable valuation needs to rely on more than an analysis of cash receipts and payments during a certain period. B) The FASB stresses that the primary objective of financial reporting is to provide useful information to investors and creditors in assessing the amount, timing, and uncertainty of future net cash flows. C) The FASB contends that users pay attention to a firm's accounting earnings because this measure improves their ability to forecast future cash flows. D) The FASB believes that current cash flows are more useful than current accrual accounting earnings in predicting future cash flows.
D) The FASB believes that current cash flows are more useful than current accrual accounting earnings in predicting future cash flows.
Examples of variable consideration include all of the following except: A) bonuses for completing performance on a contract early. B) penalties for not completing performing on a contract on time. C) discounts on transaction prices. D) all of the answer choices are correct.
D) all of the answer choices are correct.
Under the new revenue recognition guidance in ASC Topic 606, a performance obligation is satisfied over time if: A) the customer simultaneously receives and consumes the goods and services provided by the firm. B) the firm's performance does not create an asset with an alternative use and the firm has a right to receive payment for its performance to date. C) the firm's performance creates or enhances an asset under the customer's control. D) any of these answer choices is correct.
D) any of these answer choices is correct.
Peter Inc. currently holds cash denominated in Euros. In its consolidated balance sheet, Peter Inc. should report the cash A) at its future value. B) at its present value. C) in Euros. D) in Dollars.
D) in Dollars.
Joe Carie, head accountant, is using the indirect method and the account balance from the balance sheet and income statement to prepare a statement of cash flows. A decrease in the balance of the Accounts Receivable account would: A) decrease cash flow from operating activities. B) increase cash flow from investing activities. C) decrease cash flow from financing activities. D) increase cash flow from operating activities.
D) increase cash flow from operating activities.
Relevant financial information: A) can be independently verified. B) is free from bias and error. C) is measured in a similar manner among different companies. D) is capable of making a difference in a decision.
D) is capable of making a difference in a decision.
The accounts receivable turnover ratio A) is not useful in determining changes in customer payment patterns. B) uses total sales and not just credit sales in the computation. C) is computed using net credit sales and ending accounts receivable. D) is computed using net credit sales and average accounts receivable.
D) is computed using net credit sales and average accounts receivable.
Liabilities represent amounts that are: A) always classified as current on the balance sheet. B) netted against assets on the balance sheet. C) never shown on the balance sheet at historical cost. D) probable future economic sacrifices obtained or controlled by an entity as a result of past transactions or events.
D) probable future economic sacrifices obtained or controlled by an entity as a result of past transactions or events.
When a debt covenant is violated, the related debt must be classified as current if it is: A) probable that the borrower will not be able to cure the default within the next fifteen months. B) probable that the borrower will be able to cure the default in the next fifteen months. C) probable that the borrower will be able to cure the default in the next twelve months. D) probable that the borrower will not be able to cure the default within the next twelve months.
D) probable that the borrower will not be able to cure the default within the next twelve months.
Regulatory Accounting Principles (RAP) can be used: A) to set the prices customers may be charged. B) as a source of statistical information. C) as a basis for supervisory action. D) to determine the amount of dividend to be paid.
D) to determine the amount of dividend to be paid.
Bloom Inc. estimates credit losses of $25,000 and $32,500, associated with accounts receivables and notes receivables, respectively. The two credit losses should be reported A) as off-sets to the related revenue. B) when the specific creditors refuse to pay. C) in aggregate for both categories. D)separately by category.
D)separately by category.
Both common and preferred stock dividends are subtracted in arriving at net income available to common stockholders. TRUE FALSE
FALSE
Financial reports provide information that can reduce investors' uncertainty about the company's opportunities and risks, thereby raising the company's cost of capital. TRUE FALSE
FALSE
For ratio analysis, a distortion in the current ratio under LIFO inventory costing may be adjusted by subtracting the LIFO reserve from current assets. TRUE FALSE
FALSE
Generally accepted accounting principles do not allow variable costing to be used in external financial statements because absorption costing makes it easier for financial statement users to interpret year-to-year changes in reported net income. TRUE FALSE
FALSE
Liquidity refers to how quickly noncurrent assets will be converted into cash to pay liabilities. TRUE FALSE
FALSE
The two most significant explanations for variations in the earnings multiple are risk differences and maturity of the firm. TRUE FALSE
FALSE
To get revenue and expense account balances to zero an adjusting entry is made. TRUE FALSE
FALSE (Closing entries are made)
Hickory Furniture Company paid for the following costs during the month of May: Inventory purchases $40,000 Advertising costs 8,000 Delivery costs 2,000 Hickory sold $32,000 of the inventory and has agreed to pay warranty expenses for its customers. These are expected to be $1,600 and occur evenly over the next four months (i.e., starting in June). What type of cost is the advertising expense? A) Traceable cost B) Inventory Cost C) Product Cost D) Period Cost
Period Cost
ASC Topic 606 provides a five-step model for evaluating how and when revenue should be recognized rather than providing detailed industry-by-industry standards. TRUE FALSE
TRUE
Accrual accounting decouples measured earnings from operating cash inflows and outflows. TRUE FALSE
TRUE
All inventory items to which the firm has legal title should be included in the inventory account although most firms record inventory only when they physically receive it. TRUE FALSE
TRUE
Contract terms can be designed to eliminate or reduce conflicting incentives that arise in business relationships. TRUE FALSE
TRUE
Gamebox, a seller of video-gaming systems, games and online gaming subscriptions, recently made available a coupon that allows its gaming subscription members to extend their subscriptions by three months at no charge. Subscribers need only to login to the website using their user name and password and provide the coupon code. Because this contract modification (from 12 months to 15 months) does not add distinct goods or services from the original contract, Gamebox need only make a cumulative catch-up adjustment. TRUE FALSE
TRUE
Operating and administrative efficiencies that result in lower expenses per dollar of sales possibly explain a trend where net income grows faster than sales. TRUE FALSE
TRUE
Selected unrealized gains (or losses) sometimes bypass the income statement and are reported as direct adjustments to a stockholders' equity account. TRUE FALSE
TRUE
Sell4U is an online site that allows its clients to post items for sale. Sell4U charges a 5% brokerage fee for use of the site, payable within 10 days of the sale. As an agent, Sell4U may recognize revenue for the brokerage fee as soon as an item is sold. TRUE FALSE
TRUE
The cash flow statement explains why a firm's cash position has changed between successive balance sheet dates while simultaneously explaining the changes that have taken place in the firm's noncash asset, liability, and stockholders' equity accounts over the same period. TRUE FALSE
TRUE
The point within the operating cycle when the company satisfied its contractual obligation is the point when revenue should be recognized. TRUE FALSE
TRUE
U.S. GAAP has been criticized as being too "rules-based" thus allowing managers to invent "loopholes" that conform to the letter of a standard but simultaneously violate its spirit. TRUE FALSE
TRUE
Per U.S. GAAP, fair value for accounting purposes is: an entry price. the market price in a forced sale. Incorrect always easily determinable. an exit price.
an exit price.
The two basic incentive compensation plans are referred to as "plan within a plan" and: limited plan top-down plan plan outside plan bottom-up plan
bottom-up plan
Short-term notes sold directly to investors by large, highly rated companies are called: bonds. commercial paper. secured notes. debentures.
commercial paper.
A covenant that specifies a required minimum level of net worth and working capital is a/an: negative covenant. implicit covenant. financial covenant. compliance covenant.
financial covenant.
