Which of the Following Statements Is False

question 43

Multiple Choice

Which of the following statements is false?

• A) When following a conservative financing policy, a firm would use long-term sources of funds to finance its fixed assets, permanent working capital, and some of its seasonal needs.
• B) An aggressive financing policy also increases the possibility that managers of the firm will use this excess cash nonproductively-for example, on perquisites for themselves.
• C) A firm could finance its short-term needs with long-term debt, a practice known as a conservative financing policy.
• D) To implement a conservative financing policy effectively, there will necessarily be periods when excess cash is available-those periods when the firm requires little or no investment in temporary working capital.

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Definitions:

Capacity

Refers to the legal ability of a person to enter into binding contracts.

Judicial Lien

A judicial lien is a lien obtained by a creditor through court action, usually after winning a judgment against the debtor, granting the creditor a legal claim on the debtor's property as security for the debt.

Charging Order

A legal order granted to a creditor, giving them the right to attach a debtor's interest in a partnership or an LLC to satisfy the debt.

RUPA

The Revised Uniform Partnership Act, which provides a legal framework for the operation of partnerships in the United States.