The need for operating funds:
A)eventually is eliminated as a business matures.
B)increases when a firm introduces new products or enters a new market.
C)is established by relevant government laws and regulations.
D)remains constant regardless of the activities of the firm.

Question

Quizplus · Accepted Answer

Operating funds refer to the funds that a business needs to perform its regular operations. As a business expands and introduces new product lines or enters new markets, it requires more funds to sustain its operations. Therefore, the need for operating funds increases as the business grows. The other options are incorrect as the need for operating funds does not depend on the maturity of the business or the government laws and regulations. It also fluctuates based on the activities of the firm.

The Need for Operating Funds