Which of the Following Statements Is FALSE

question 27

Multiple Choice

Which of the following statements is FALSE?

• A)The matching principle indicates that the firm should finance permanent working capital with short-term sources of funds.
• B)Following the matching principle should,in the long run,help minimize a firm's transaction costs.
• C)In a perfect capital market,the choice of financing is irrelevant;thus,how the firm chooses to finance its short-term cash needs cannot affect value.
• D)A portion of a firm's investment in its accounts receivable and inventory is temporary and results from seasonal fluctuations in the firm's business or unanticipated shocks.

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Definitions:

Organic Product

A compound or material derived from living organisms or produced by chemical reactions involving organic compounds.

Reaction

A procedure whereby reactants are changed into different entities, the outcomes of which are called products.

Sodium Salt

A compound formed from the neutralization of an acid with sodium hydroxide, where the hydrogen of the acid is replaced with a sodium ion.

Fatty Acid

Organic molecules consisting of a hydrocarbon chain and a terminal carboxyl group, playing vital roles in energy storage and cell membrane structure.