Which Short-Term Financing Policy States That Short-Term Cash Needs Should

question 13

Multiple Choice

Which short-term financing policy states that short-term cash needs should be financed with short-term debt and long-term cash needs should be financed with long-term sources of funds?

• A) aggressive policy
• B) evergreen credit
• C) matching principle
• D) conservatism principle

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Definitions:

Present Value

The value today of a sum of money to be received in the future, or a series of future payments, based on a chosen rate of return.

Minimum Lease Payments

The lowest amount that a lessee is expected to pay over the lease term, as specified in a lease agreement.

Leased Asset's Fair Value

The estimated market value of an asset under lease, which should represent what the asset would sell for in an arm's length transaction.

GAAP

Generally Accepted Accounting Principles, a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.