Spontaneous Funds Are Generally Defined as Follows

question 16

Multiple Choice

Spontaneous funds are generally defined as follows:

• A) A forecasting approach in which the forecasted percentage of sales for each item is held constant.
• B) Funds that a firm must raise externally through short-term or long-term borrowing and/or by selling new common or preferred stock.
• C) Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include immediate increases in accounts payable, accrued wages, and accrued taxes.
• D) The amount of cash raised in a given year minus the amount of cash needed to finance the additional capital expenditures and working capital needed to support the firm's growth.
• E) Assets required per dollar of sales.

---

Definitions:

Documentation Procedures

The processes used for documenting a company's financial transactions, activities, and controls to ensure accuracy and reliability of financial records.

Documentation Procedures

The systematic process of organizing, managing, and maintaining records and documents for business operations.

Physical Controls

Security measures used to safeguard tangible assets from loss or theft, such as locks, alarms, and surveillance.

Independent Internal Verification

A process within companies where transactions and operations are reviewed by internal staff members who are not directly involved in the execution of these transactions, to ensure accuracy and compliance.