Scrapping Products Is Implementing a Project That Will Initially Increase

question 26

Multiple Choice

Scrapping Products is implementing a project that will initially increase accounts payable by $3,000, increase inventory by $1,800, and decrease accounts receivable by $1,200.All net working capital will be recouped when the project terminates.What is the cash flow related to the net working capital for the last year of the project?

• A)$2,400
• B)$2,100
• C)-$2.400
• D)-$2,100
• E)$3,300

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Definitions:

Adjusted Trial Balance

A financial statement that lists all account balances in the general ledger after adjustments are made, ensuring credits and debits match.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, preparing the books for the next period.

Long-term Note Payable

A liability in the form of a written promise to pay a specified sum of money, with a maturity of more than one year from the date of issuing.

Accrual Accounting

An accounting method where transactions are recorded when they are earned or incurred, rather than when cash is exchanged, providing a more accurate financial picture.