Question

question 6
which of the following is considered spontaneously generated financing?

• inventory
• prepaid expenses
• accounts payable
• accounts receivable

Explanation:

Spontaneously generated financing refers to short - term liabilities that arise naturally in the course of business operations, without the need for a specific financing decision. Inventory is an asset (a current asset related to goods held for sale), prepaid expenses are also an asset (representing payments made in advance for expenses), and accounts receivable is an asset (amounts owed to the company by customers). Accounts payable, on the other hand, is a liability that occurs as a result of purchasing goods or services on credit, which is a spontaneous form of financing as it arises from normal business transactions.

Answer:

C. Accounts payable