Spontaneous funds are generally defined as follows:
A) A forecasting approach in which the forecasted percentage of sales for each item is held constant.
B) Funds that a firm must raise externally through short-term or long-term borrowing and/or by selling new common or preferred stock.
C) Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include immediate increases in accounts payable, accrued wages, and accrued taxes.
D) The amount of cash raised in a given year minus the amount of cash needed to finance the additional capital expenditures and working capital needed to support the firm's growth.
E) Assets required per dollar of sales.

Question

Quizplus · Accepted Answer

Spontaneous funds refer to the financial resources that a company generates automatically as a result of its day-to-day operations. These include increases in accounts payable and accrued expenses like wages and taxes, which do not require explicit action to be raised.

Spontaneous Funds Are Generally Defined as Follows