Which of the following represents spontaneous financing?

A) The origination of a 9-month bank loan
B) The issuance of a note payable with a maturity of less than one year
C) An increase in accounts payable resulting from the purchase of inventories on 30-day credit
D) a and c
E) All of the above

Question

Trisha Nicole Sumagui · Accepted Answer

Final Answer : C, Explanation :  Spontaneous financing refers to any increase in current liabilities, such as accounts payable, that results from normal business operations. Options A and B both involve obtaining external financing, while option D includes both external and spontaneous financing. Option C is the only choice that represents spontaneous financing by increasing accounts payable due to purchasing inventories on credit.

Which of the following represents spontaneous financing?

A) The origination of a 9-month bank loan
B) The issuance of a note payable with a maturity of less than one year
C) An increase in accounts payable resulting from the purchase of inventories on 30-day credit
D) a and c
E) All of the above

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Learning Objectives

Learning Objectives

Related questions

Which of the following represents spontaneous financing?A) The origination of a 9-month bank loanB) The issuance of a note payable with a maturity of less than one yearC) An increase in accounts payable resulting from the purchase of inventories on 30-day creditD) a and cE) All of the above

Definitions

Learning Objectives

Learning Objectives

Related questions

Which of the following represents spontaneous financing?

A) The origination of a 9-month bank loan
B) The issuance of a note payable with a maturity of less than one year
C) An increase in accounts payable resulting from the purchase of inventories on 30-day credit
D) a and c
E) All of the above