Changes in the Net Working Capital

question 184

Multiple Choice

Changes in the net working capital:

• A) Can affect the cash flows of a project every year of the project's life.
• B) Only affect the initial cash flows of a project.
• C) Are included in project analysis only if they represent cash outflows.
• D) Are generally excluded from project analysis due to their irrelevance to the total project.
• E) Affect the initial and the final cash flows of a project but not the cash flows of the middle years.

---

Definitions:

Customer Refunds Payable

An account in the liabilities section of the balance sheet that represents obligations to return money to customers for returned, damaged, or unsatisfactory goods.

Adjusting Entry

A record finalized at the close of a financial period for assigning earnings and costs to the actual period of occurrence.

Estimated Returns Inventory

An accounting method used to estimate the value of goods that are expected to be returned by customers.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting operating expenses, interest, and taxes.