Normally, permanent current assets should be financed by
A) long-term funds.
B) short-term funds.
C) borrowed funds.
D) internally generated funds.

Question

Quizplus · Accepted Answer

Permanent current assets are those assets that are necessary for the operation of a business and are expected to last more than one year. Since they are long-term in nature, it is appropriate to finance them with long-term funds rather than with short-term or borrowed funds, which are more appropriate for financing temporary current assets. Internally generated funds could be an option, but they may not always be sufficient to cover the cost of permanent current assets. Therefore, the best choice for financing permanent current assets is long-term funds.

Normally, Permanent Current Assets Should Be Financed by