Other Things Held Constant, Which of the Following Will Cause

question 80

Multiple Choice

Other things held constant, which of the following will cause an increase in working capital?

• A) Cash is used to buy marketable securities.
• B) A cash dividend is declared and paid.
• C) Merchandise is sold at a profit, but the sale is on credit.
• D) Long-term bonds are retired with the proceeds of a preferred stock issue.
• E) Missing inventory is written off against retained earnings.

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Definitions:

Nonessential Diamonds

Diamonds categorized as luxury items, not required for basic living or survival needs.

Diamond-water Paradox

The contradiction observed in value theory where essential goods like water have low prices, while non-essential goods like diamonds have high prices.

Essential Goods

Products that are necessary for basic living and well-being, often unchanged by changes in income.

Nonessential Goods

Products and services considered as non-critical for survival or basic living standards.