Accounting Multiple Choice Question – 11 August 2022

A business redeems debentures by cash payment.

What is the effect of this payment on equity, long-term liabilities and working capital?

Select ONE answer:

1. equity decrease & long term liabilities decrease & working capital decrease
2. equity decrease & long term liabilities decrease & working capital no change
3. equity no change & long term liabilities decrease & working capital decrease
4. equity no change & long term liabilities increase & working capital decrease

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

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