Question

Financial and ethical considerations when reporting some current liabilities as non-current:

A. Financial: Enhances short-term liquidity; Ethical: May mislead stakeholders.
B. Financial: Improves long-term solvency; Ethical: Enhances transparency.
C. Financial: Increases profitability; Ethical: Maintains honesty in reporting.
D. Financial: Decreases risk; Ethical: Confirms accurate financial position.

Answer 1

When reporting some current liabilities as non-current, it can enhance short-term liquidity but may mislead stakeholders.

Step-by-step explanation:

When reporting some current liabilities as non-current, there are both financial and ethical considerations to take into account. Financially, reporting these liabilities as non-current can enhance short-term liquidity by making it appear that the company has more immediate resources available. However, ethically, this practice may mislead stakeholders by obscuring the true short-term obligations of the company.

Therefore, based on the options given, the most accurate answer would be option A. Reporting current liabilities as non-current enhances short-term liquidity but may mislead stakeholders.