Which one of the following statements is false?
A)Short-term obligations may be classified as long-term if the company intends to refinance them on a long-term basis and can demonstrate the ability to do so.
B)Violation of a long-term debt covenant automatically means the company must reclassify the debt as current.
C)Current liabilities are recorded at their maturity value, and not their present value.
D)If a bond is issued at a discount the effective interest rate is greater than the coupon rate.

Question

Quizplus · Accepted Answer

Violation of a long-term debt covenant does not automatically mean the debt must be reclassified as current. The classification depends on whether the violation results in the debt being due within the operating cycle or within one year of the balance sheet date.

Which One of the Following Statements Is False