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Laura,the controlling shareholder and an employee of Southwest Corporation,receives an annual salary of $750,000.Based on several factors including the size of the corporation's operations and a comparison of salary received by officers of comparably-sized corporations,the IRS contends that Laura's salary should be no higher than $600,000.The Court upheld the IRS's position.As a result,which of the following is true?
Net Working Capital
The difference between a company's current assets and current liabilities, indicating its short-term financial health.
Current Assets
Assets that are expected to be converted into cash, sold, or consumed within a year's time, such as cash, inventory, and receivables.
Current Liabilities
Short-term financial obligations that a company owes and is expected to pay within one year or its operational cycle, whichever is longer.
Compensating Balance
A minimum bank account balance that a borrower must maintain as a condition for obtaining a loan.
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