Which of the Following Is True of Long-Term Funds

question 56

Multiple Choice

Which of the following is true of long-term funds?

• A) They provide an easy way to reduce financing costs because they are relatively cheaper than short-term funds.
• B) They are a type of investment fund which invests in money market investments of high quality and low risk.
• C) They are the sources that supply the financing necessary to support a firm's capital budgeting activities.
• D) They are the funds available to a business on the basis of inventory held and require detailed inventory tracking.

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Definitions:

Buyer's Place

The agreed location where the buyer takes ownership of goods purchased, significant in determining shipping costs and liability.

Perpetual Inventory System

An inventory management approach where inventory levels are updated in real time with each sale or purchase.

Gross Method

A method in accounting that logs purchases using the total invoice amount, not considering any cash discounts that are available.

Operating Cycle

The operating cycle is a measure of the time period between the acquisition of inventory by a business and the collection of cash from accounts receivable, indicating the efficiency and effectiveness of its operations.