As the firm expands, the spontaneous increase in which of the following is a source of finance?
A) equipment
B) inventory
C) accounts payable
D) accounts receivable

Question

As the firm expands, the spontaneous increase in which of the following is a source of finance?​
A) ​equipment
B) ​inventory
C) ​accounts payable
D) ​accounts receivable

Quizplus · Accepted Answer

As the firm expands, it is likely to increase its inventory and purchase more goods on credit from suppliers. This will result in an increase in accounts payable (money owed to suppliers) which can be considered a source of financing as it represents an increase in funds available to the firm without requiring immediate payment. Option A (equipment), option B (inventory), and option D (accounts receivable) are not spontaneous increases and would require additional investment or sales to generate funds.

As the Firm Expands, the Spontaneous Increase in Which of the Following