Which of the following statements about funds that a firm generates spontaneously (internally) is correct?
A)In general, current liabilities that change naturally with changes in sales provide spontaneously generated funds.
B)Spontaneously generated funds are funds that a firm must raise by issuing new stocks and new bonds.
C)Notes payable, long-term bonds, and common stock provide most of the firm's spontaneously generated funds.
D)Spontaneously generated funds tend to change at the same rate as a change in the firm's net operating income.
E)Current liabilities that provide spontaneously generated funds require the firm's management to make conscious financing decisions.

Question

Quizplus · Accepted Answer

Spontaneously generated funds are generated internally by the firm without the need for external financing, such as issuing new stocks or bonds. Current liabilities that change naturally with changes in sales, such as accounts payable and accrued expenses, provide spontaneously generated funds to the firm.

Which of the Following Statements About Funds That a Firm