ACCA FM · Chapter 5 · Question 7 of 10
What is meant by 'permanent current assets'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The minimum level of inventory, receivables and cash that a business needs to hold at all times to support its normal level of activity
Explanation
Although individual items of inventory and receivables are continually turned over, a business always needs a core level of current assets to operate. This core level is permanent and should normally be financed long term. Seasonal or temporary increases above this level are fluctuating current assets.
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