With the matching approach to meeting the financing needs of the firm, fixed and permanent current assets are financed with

Question

Quizplus · Accepted Answer

The matching approach to financing suggests that long-term assets should be financed with long-term funds and short-term assets should be financed with short-term funds. Fixed and permanent current assets are long-term in nature as they are expected to have a useful life span of more than one accounting period. Long-term debt and equity funds are the appropriate sources of financing for these assets as they provide long-term funds. Hence, option D) a and c are the best choices for financing fixed and permanent current assets.

With the Matching Approach to Meeting the Financing Needs of the Firm