External Funding Requirements Can Be Estimated Using an Equation Called

question 111

Multiple Choice

External funding requirements can be estimated using an equation called the EFR relationship. The simple concept behind this equation is that funds will be needed to the extent of forecasted:

• A)growth in assets minus new retained earnings.
• B)growth in sales minus all current liabilities minus all retained earnings.
• C)assets minus current liabilities minus new retained earnings.
• D)growth in assets minus growth in current liabilities minus new retained earnings.

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Definitions:

Freight-In

The cost associated with getting inventory to a business, usually included in the cost of goods sold.

GAAP

The collection of standard accounting practices widely recognized for financial reporting is called Generally Accepted Accounting Principles.

Perpetual System

A system for managing inventory accounts that instantly logs inventory sales or acquisitions using computerized point-of-sale systems and software for enterprise asset management.

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.