Question

___ is generally used for financing purchase of plant and equipment

Answer 1

Loans and borrowings are generally used for financing the purchase of plant and equipment.

Explanation:

• Plant and machinery are some of those assets of a firm for which a huge amount of finances are required to acquire.
• A firm cannot be expected to have so many funds at a point in time to allow such procurement.
• Therefore borrowings and loans from banks as well as other financial institutions are used for financing such purchases.
• Other assets such as land, vehicles, etc also require financing from outside sources.