Which of the Following Statements Is FALSE

question 1

Multiple Choice

Which of the following statements is FALSE?

• A)Because investment in permanent working capital is required so long as the firm remains in business,it constitutes a long-term investment.
• B)Because temporary working capital represents a short-term need,the firm should finance this portion of its investment with short-term financing.
• C)Temporary working capital is the difference between the lowest level of investment in short-term assets and the permanent working capital investment.
• D)The matching principle states that short-term needs should be financed with short-term debt and long-term needs should be financed with long-term sources of funds.

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Definitions:

Traditional Environment

An operational setting adhering to long-established methods and practices, often resisting modernization.

Setups

Preparatory actions or costs associated with configuring equipment or workspaces for a production run or task.

Time-Consuming Activity

Tasks or processes that require a significant amount of time to complete, often reducing efficiency.

Traditional Production

A manufacturing approach that typically involves manual labor, straightforward production techniques, and simpler organization structures.