Which of the following are considered to be spontaneous sources of financing (i.e. ,they arise naturally during the course of doing business)?
A)Notes payable and ordinary shares
B)Accounts receivable and bonds
C)Fixed assets and inventory
D)Accounts payable and accrued expenses

Question

Quizplus · Accepted Answer

Accounts payable and accrued expenses are considered spontaneous sources of financing because they are a result of the normal course of business operations. These liabilities arise as a result of purchasing goods and services on credit from suppliers, and are therefore a natural part of the cash cycle of a business. Notes payable and bonds are considered non-spontaneous sources of financing, as they require deliberate action on the part of the company to secure financing. Fixed assets and inventory are not sources of financing at all, but rather assets that are used to generate revenue. Ordinary shares may be considered a form of spontaneous financing if the company has a policy of issuing new shares periodically to raise capital, but this is not always the case.

Which of the Following Are Considered to Be Spontaneous Sources