As a firm's sales grow its current asset accounts tend to increase. For instance, as sales increase the firm's inventories increase and its level of accounts payable will increase. Thus, spontaneously generated funds will arise from transaction accounts that increase as sales increase.

Question

Quizplus · Accepted Answer

This statement is true as sales growth leads to an increase in current assets such as inventories and accounts payable, which generate spontaneously generated funds from transaction accounts.

As a Firm's Sales Grow Its Current Asset Accounts Tend