Ideally, Permanent Current Assets Should Be Financed with Short-Term Borrowings

question 58

True/False

Ideally, permanent current assets should be financed with short-term borrowings.

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Definitions:

Mortgage Notes Payable

A form of long-term debt where the borrower agrees to pay back a loan used to purchase real estate, along with interest, over a specified period.

Financing Activity

Financial transactions and events that affect the equity and debt structure of a company, including borrowing, repaying debt, and issuing or buying back shares.

Operating Activity

Transactions and events related to the core business operations of a company, including revenue generation and expenses related to producing goods and services.

Gain

A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.