The facts (1) that no explicit interest is paid on accruals and (2) that the firm can control the level of these accounts at will makes them an attractive source of funding to meet working capital needs.

Question

Quizplus · Accepted Answer

Accruals are not a source of funding that can be controlled at will, as they depend on the timing of expenses and revenues, and they do not provide explicit interest or cash inflow.

The Facts (1) That No Explicit Interest Is Paid on Accruals