Which of the following best defines the term "spontaneously generated funds"?
A)the amount of assets required per dollar of sales
B)a forecasting approach in which the forecasted percentage of sales for each item is held constant
C)funds that a firm must raise externally through borrowing or by selling new common or preferred stock
D)funds that are obtained automatically from normal operations, which include spontaneous increases in accounts payable and accruals, plus additions to retained earnings

Question

Quizplus · Accepted Answer

Spontaneously generated funds refer to the funds that are automatically obtained from normal business operations, including increases in accounts payable and accruals, along with additions to retained earnings. These funds do not require external borrowing or issuing new stock, and they are generated as a result of the company's day-to-day business activities.

Which of the Following Best Defines the Term "Spontaneously Generated