ACCA Applied Knowledge · Business and Technology · Accounting and finance functions within business organisations
Which of the following is a source of long-term external finance for a company?
Issuing redeemable debentures is a long-term external source of finance because the company borrows from outside investors for several years. Trade payables and overdrafts are short-term, while retained earnings come from inside the business rather than external providers.
- ATrade payables
- BBank overdraft
- CIssue of redeemable debenturesCorrect
- DRetained earnings
Explanation
Redeemable debentures are borrowings from outside investors repayable over the long term. Trade payables and overdrafts are short-term, and retained earnings are internal finance, so they are not long-term external sources.
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