Which of the following represents spontaneous financing?
A)The origination of a 9-month bank loan
B)The issuance of a note payable with a maturity of less than one year
C)An increase in accounts payable resulting from the purchase of inventories on 30-day credit
D)a and c
E)All of the above

Question

Quizplus · Accepted Answer

Spontaneous financing refers to any increase in current liabilities, such as accounts payable, that results from normal business operations. Options A and B both involve obtaining external financing, while option D includes both external and spontaneous financing. Option C is the only choice that represents spontaneous financing by increasing accounts payable due to purchasing inventories on credit.

Which of the Following Represents Spontaneous Financing