Final answer:
The statement regarding other financing sources increasing fund balance similarly to revenues is false; they are different concepts in accounting and financial management. Profits can be reinvested as financial capital, but external sources like banks and bonds are also essential, especially when profits are not enough.
Step-by-step explanation:
The assertion that other financing sources increase fund balance in the same manner as revenues is false. Revenues are increases in fund balance that result from the entity's primary operations, such as taxes in the case of a government, or sales of goods and services for a business. On the other hand, other financing sources, such as debt issuance or transfers from other funds, may indeed increase the fund balance but are not considered revenues because they are not generated by the primary operations of the entity.
Profits serve as a primary source of financial capital for firms, with reinvestment into the business's operations being a common use for these earnings. When profits are insufficient, firms might seek external financing methods like banks and bonds to fund their capital needs and invest in opportunities that can promote growth and ensure the firm's survival during challenging economic times.