From the Following Choices, Select the Answer That Describes the Effect

question 184

Multiple Choice

From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Paid cash for supplies

• A)Working capital will increase
• B)Working capital will decrease
• C)Working capital will not change

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Definitions:

Normal Debit Balance

Refers to the expected balance of an account based on its classification in the accounting system, where assets and expenses typically have a debit balance.

Sales Discounts

Sales discounts are reductions in price offered to customers as an incentive for early payment or to encourage sales.

Net Sales

The total sales income of a company after removing costs associated with returns, allowances for damaged or lost items, and price reductions.

Multiple-Step Income Statement

A detailed financial statement that separates operating revenue and expenses from non-operating items, displaying multiple layers of income and expense.