Which of the Following Will Decrease Working Capital

question 94

Multiple Choice

Which of the following will decrease working capital?

• A) collection of accounts receivable
• B) purchase of a new computer with cash
• C) payment of salaries payable
• D) purchase of merchandise on credit

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Definitions:

Double Taxation

The imposition of taxes on the same income, asset, or financial transaction at two different levels of government, often seen in the taxation of corporate profits and then again when dividends are paid to shareholders.

Limited Liability

An advantage of the corporate form. Stockholder liability for the actions of a company is limited to the value of the stock. That is, a suit against the corporation cannot be made against a stockholder simply because the stockholder is an owner.

Proprietorships

A type of business entity that is owned and operated by a single individual, without any legal distinction between the owner and the business.

Sole Proprietor

An individual who owns and operates a business alone, bearing unlimited liability for the business's debts and obligations.