Which of the following creates spontaneous financing?
A)Accounts payable
B)Accrual liabilities
C)Trade credit
D)Both a. and b. create spontaneous financing.
E)All of the above create spontaneous financing.

Question

Quizplus · Accepted Answer

Spontaneous financing refers to the automatic increase in certain current liabilities that occur naturally during the course of business operations. Accounts payable, accrual liabilities, and trade credit all increase as a company purchases goods and services on credit, thereby creating spontaneous financing. These liabilities do not require formal negotiations or explicit financing arrangements, hence they are considered spontaneous.

Which of the Following Creates Spontaneous Financing