A current asset is an asset that is available for use within the next 12 months. Question 5. Given the temporary and permanent nature of current assets, they can be financed with either short- or long-term sources of funding, however, there is a risk/return trade-off. Top Answer. A conservatively financed firm would 80. for neo only 25,26,27 25) Normally, permanent current assets should be financed by A. short-term funds. B. short-term funds. Regular data backups are an important asset to have when trying to recover after a data loss event, ... Service costs at data recovery labs are usually dependent on type of damage and type of storage medium, as well as the required security or cleanroom procedures. Taking the same example, the period of money requirement is 5 years, whereas financing is with a loan maturing after 1 year only. B. short-term funds. The source of finance chosen also depends on the time period and what you need the finance for; The key questions that managers have to answer are: how much finance is needed; whether it can be obtained internally; whether it should be borrowed temporarily, with a view to paying back, or obtained as permanent (e.g. An example of a permanent difference is a company incurring a fine. Let’s consider the same situation as in scenario 2, but the selling price was only $500. 5,000 and so on) should be financed from short-term sources. This includes all liquid, short-term investments that are easily convertible into cash. c) Borrowed funds. 3 4 5. The journal entry for the disposal should be: Scenario 3: Disposal by asset sale with a loss. Donations of stock and other investments can be dicey. Current tax assets and liabilities are measured at the amount expected to be paid to (recovered from) taxation authorities, using the rates/laws that have been enacted or substantively enacted by the balance sheet date. 2010-12-08 22:16:57 2010-12-08 22:16:57. long term funds. B. short-term rates are equal to long-term rates. Also known as fixed working capital, it is that level of net working capital below which it has never gone on any day in the financial year. AICPA standards not controlling at trial. 5,400; Rs. bank loan, trade creditors, etc.). But when aggressive strategy is adopted, sometimes the firm runs into mismatches and defaults. B. borrowed funds. The current asset financing strategy focuses on determining the best method of financing both temporary and permanent current assets. Net working capital (NWC) means current assets less current liabilities. The accounts reflected on a trial balance are related to all major accounting Accounting Accounting is a term that describes the process of consolidating financial information to make it clear and understandable for all items, including assets Types of Assets Common types of assets include current, non-current, physical, intangible, operating, and non-operating. Wiki User Answered . This preview shows page 13 - 16 out of 20 pages.. 26) Normally, permanent current assets should be financed by A. internally generated funds. 78. False (15-3) Current asset financing F S Answer: a EASY 7. Thus, there was a loss on the sale. True b. Do not include in current assets cash that is restricted, or to be used to pay down a long-term liability. Short-term financing is normally used to support the working capital gap of business whereas the long term is required to finance big projects, PPE, etc. Then, when construction was completed, MMC would provide the home purchaser with permanent mortgage financing. Answer. ; Self-funder: if your savings and assets are worth more than the upper limit, you will be a self-funder. Long-Term Financing. Permanent Assets Financed with Short Term Financing. The balance sheet shows a company's resources or assets while also showing how those assets are financed … Normally permanent current assets should be financed by? Since the total assets of a business must be equal to the amount of capital invested by the owners (i.e. Normally, permanent current assets should be financed by A. long-term funds. Normally permanent current assets should be financed by A long term funds B from CBA 0956517456 at Manuel S. Enverga University Foundation - Lucena City, Quezon C. borrowed funds. Current assets and fixed assets are listed on the balance sheet. share capital and profits) or from external credit (e.g. American Savings Bank . Investment asset donations for endowments, scholarships, and other purposes should be reviewed by accounting, preferably before they’re accepted—for sure before they’re budgeted or spent. Assets of an entity may be financed from internal sources (i.e. d) Internally generated funds . B. internally generated funds. 77. Example: A fixed asset which is expected to provide cash flow for 5 years should be financed by approx 5 years long-term debts. [IAS 36.44] Estimates of future cash flows should not include cash inflows or outflows from financing activities, or income tax receipts or payments. Some of the major methods for long-term financing are discussed below. In other words, it is the difference between financial accounting and tax accounting that is never eliminated. 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