Working capital may be tied to certain debt covenants causing cash to be considered significant for audit purposes.

Question

Quizplus · Accepted Answer

If working capital is tied to certain debt covenants, then cash becomes crucial for meeting those obligations. This makes cash significant for audit purposes, as auditors need to ensure that there is enough cash to meet the debt obligations and maintain the desired level of working capital.

Working Capital May Be Tied to Certain Debt Covenants Causing