Question

A fixed asset should be financed through

Options

• a long term liability

• a short term liability

• a mix of long and short term liabilities

• None of the above

Answer 1

a long term liability

Explanation -

Fixed assets are assets that are held in a corporation for a longer period of time, usually more than a year. These assets should be financed using long-term liabilities such as long-term loans, preference shares, retained earnings, and so on, because they have a long-term impact on the business's growth and profitability.