If a Project Is Expected to Increase Inventory by $15,000

question 20

Multiple Choice

If a project is expected to increase inventory by $15,000, increase accounts payable by $10,000, and decrease accounts receivable by $1,000, what effect does working capital have during the life of the project?

• A)Increases investment by $4,000
• B)Increases investment by $5,000
• C)Increases investment by $6,000
• D)Working capital has no effect during the life of the project

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Definitions:

Precambrian

denotes the vast period of time before the Cambrian period, covering the formation of the Earth until about 541 million years ago.

Paleozoic

An era of geological time from about 541 to 252 million years ago, marked by the development of early life forms to the advent of reptiles and the end of the Permian period.

Mesozoic

An era of geological time from about 252 to 66 million years ago, known as the "Age of Reptiles" and marked by the dominance of dinosaurs.

Cenozoic

The most recent of the three major subdivisions of animal and plant life geologic time, covering the period from 66 million years ago to the present.