Question 40 Not yet answered Marked out of 1.00 Flag question Question text A ne

Question

Question 40

Not yet answered

Marked out of 1.00

Flag question

Question text

A new project will cause accounts payable to increase by $70,000, accounts receivable to increase by $70,000 and inventory to increase by $10,000. Which one of the following statements is true?

Select one:

a. Net working capital will decrease.

b. Net working capital will increase.

c. The project will not affect net working capital.

d. The change in accounts payable is a use of cash.

e. The change in inventory is a use of cash.

Explanation / Answer

Ans is option B

The project will increase net change in working capital as working capital is defined as current assets - current liabilities.

And receivables and inventories comes under current assets and payables comes under current liabilities.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.