Which of the following is not a reason why a company might prefer to report a liability as long-term rather than current?
A)It may cause the firm to appear less risky to investors and creditors.
B)It may increase interest rates on borrowing.
C)It may cause the company to appear more stable commanding a higher stock price for new stock listings.
D)It may reduce interest rates on borrowing.

Question

Quizplus · Accepted Answer

Reporting a liability as long-term rather than current may reduce interest rates on borrowing (D), make the company appear more stable commanding a higher stock price for new stock listings (C) and appear less risky to investors and creditors (A). However, it is unlikely to increase interest rates on borrowing.

Which of the Following Is Not a Reason Why a Company