Accruals represent a spontaneous source of funding but,unfortunately,due to economic forces,firms have little control over the level of these accounts.

Question

Quizplus · Accepted Answer

Accruals are non-cash transactions that represent a company's obligation to pay for goods or services it has received but not yet paid for. Examples include accrued salaries, taxes, and interest. These accounts are a spontaneous source of funding because they arise from normal business operations, rather than from borrowing or equity issuances. However, firms have little control over the level of these accounts because they depend on factors such as payment terms with suppliers, customer payment behavior, and the timing of expenses. Therefore, accruals are considered a passive form of financing.

Accruals Represent a Spontaneous Source of Funding But,unfortunately,due to Economic