"Off-the-balance-sheet" financing transactions means that ________.
A)obligations and commitments are recorded only in the income statement accounts
B)obligations and commitments are recorded only in the statement of cash flows
C)capital budgets are properly authorized and approved
D)obligations and commitments are not recorded in the accounts of the company

Question

Quizplus · Accepted Answer

Off-the-balance-sheet financing transactions are those in which the company raises funds or incurs debt without recording them on its balance sheet. These obligations and commitments are not recorded in the accounts of the company, hence the term "off-the-balance-sheet." Examples of such transactions include operating leases, where the leased asset is not recognized as an asset on the balance sheet, and special purpose entities, where a separate entity is created to hold certain assets or liabilities.

"Off-The-Balance-Sheet" Financing Transactions Means That ________