Which one of the following statements is TRUE?
A. A corporate golf club membership is an example of a nonpecuniary benefit
B. Firms borrowing money have greater flexibility to use that money when there are debt covenants.
C. When lenders protect themselves from the risk of asset switching by raising the interest rate, the firm's WACC can decrease.
D. A lender calling in a corporate loan and then lending the funds out to a safer borrower is an example of asset switching.
E. A supplier substituting a lower-quality raw material without approval is an example of asset switching.
Answer: A
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Which of the following presumptions does not relate to the appropriateness of audit evidence?
A. The independent auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly. B. An auditor's opinion, to be economically useful, is formed within a reasonable time and based on evidence obtained at a reasonable cost. C. Evidence obtained from independent sources outside the entity is more reliable than evidence secured solely within the entity. D. The more effective the internal control system, the more assurance it provides about the accounting data and financial statements.
Aubry purchased a washing machine, a freezer, and a refrigerator from Gateway Appliances on credit, giving Gateway a security interest in the appliances. The appliances were for Aubry's household use. Gateway did not file a financing statement. Six
months later, Aubry had a garage sale and sold the appliances to Tam. Tam bought the appliances for her student rental property. Aubry left town owing money on the appliances. If Gateway can trace the appliances to Tam, can Gateway repossess the appliances? Explain in detail.
The current ratio is a measure of a company's liquidity.
Answer the following statement true (T) or false (F)
The ability to reprogram machines is useful for both low-customization and high-customization processes
Indicate whether the statement is true or false