According to the self-liquidating debt principle permanent assets should be financed with ________ liabilities.
A) permanent
B) spontaneous
C) current
D) fixed

Question

Quizplus · Accepted Answer

The self-liquidating debt principle states that long-term, permanent assets should be financed with long-term, permanent liabilities. This ensures a match between the life of the asset and the life of the debt, reducing the risk of financial distress due to debt maturity mismatches. Therefore, the best choice is A - permanent liabilities.

According to the Self-Liquidating Debt Principle Permanent Assets Should Be