When a portion of inventories has been pledged as security on a loan,
a. the value of the portion pledged should be subtracted from the debt.
b. an equal amount of retained earnings should be appropriated.
c. the fact should be disclosed but the amount of current assets should not be affected.
d. the cost of the pledged inventories should be transferred from current assets to noncurrent assets
Answer: c. the fact should be disclosed but the amount of current assets should not be affected.
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a. true b. false
Accu-Tech, a small company in a tightly-contested market, discovers that sales reps of the firm's main competitor, Compu-World, have been making false and negative statements about Accu-Tech products and services
One of Accu-Tech's best customers calls the company's CEO asking about the rumors, and the CEO realizes that Accu-Tech may lose business from the Compu-World claims. What should Accu-Tech most likely do? A) Take out a full-page ad in the local newspaper disputing the claims with facts and stating that Compu-World has been lying to customers. B) Talk to Accu-Tech customers in person to give them the facts and research that support the truth about the firm's products and services. C) Contact the Compu-World CEO and arrange to divide up the local market to avoid duplicitous sales tactics. D) Take Compu-World to court for business libel and reciprocity unless the firm issues a public apology. E) Engage in a mass media campaign to spread negative information about Compu-World.