How do accounting accrual adjustments affect covenants that require minimums for retained earn-ings or for certain ratios such as the current ratio? Are those effects permanent? b. How do real operating changes affect covenants that require minimums for retained earnings or for certain ratios such as the current ratio? Are those effects permanent? c. What consequences might arise if the company focuses on managing reported numbers to avoid violating debt covenants? What parties are affected by such schemes?

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The accounts are prepared based on accrual system of accounting Hence the financial data is pro... View the full answer