Which One of the Following Will Decrease the Net Working

question 10

Multiple Choice

Which one of the following will decrease the net working capital of a firm? Assume that the current ratio is greater than 1.0.

• A)Selling inventory at a profit.
• B)Collecting a trade receivables.
• C)Paying a payment on a long-term debt.
• D)Selling a fixed asset for book value.
• E)Paying a trade payables.

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Definitions:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.

Inventories

Items held for sale in the ordinary course of business, as well as materials and components intended for use in the production process.

GAAP

A universally recognized set of rules and standards for financial reporting, applied within a specific legal territory, known as Generally Accepted Accounting Principles.

Income Statement

A financial report that provides a summary of a company's revenues, expenses, and profits/losses over a specific period of time.