According to the Matching Principle, Short-Term Needs for Funds Should

question 29

True/False

According to the matching principle, short-term needs for funds should be financed by short-term sources of funds; long-term need for funds should be financed by long-term sources of funds.

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Definitions:

Inventory Items

Goods or materials that a business holds for the purpose of sale or production.

Retail Inventory Method

An accounting method used by retailers to estimate inventory cost by using a consistent markup and grouping similar items.

Cost-To-Retail Ratio

A calculation used in inventory accounting that helps determine the ending inventory value under the retail inventory method, comparing the cost of goods to their retail price.

Ending Inventory

The worth of items available for selling when an accounting period ends, determined by adding the starting inventory to purchases and then subtracting the cost of goods sold.