Which of the Following Statements Regarding How a Firm Should

question 55

Multiple Choice

Which of the following statements regarding how a firm should finance its cash needs is true?

• A) Permanent working capital should be financed by long-term sources of funds, while temporary working capital should be financed by short-term sources of funds.
• B) Permanent working capital should be financed by short-term sources of funds, while temporary working capital should be financed by long-term sources of funds.
• C) Both permanent working capital and temporary working capital should be financed by short-term sources of funds.
• D) Both permanent working capital and temporary working capital should be financed by long-term sources of funds.

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Definitions:

Internal Controls

Mechanisms and procedures implemented within an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Ethics Audit

A systematic evaluation of an organization's moral framework, practices, and culture to identify strengths and areas for improvement in promoting ethical behavior.

Differential Association

A theory proposing that individuals learn values, attitudes, techniques, and motives for criminal behavior through interaction with others.

Cultural Audit

An evaluation process that systematically examines the culture of an organization, assessing values, behaviors, practices, and policies to determine alignment with desired objectives.