Increased Needs for Net Working Capital Are

question 23

Multiple Choice

Increased needs for net working capital are:

• A)Recognized in pro forma balance sheets
• B)Absorbed into the pro forma plug figures
• C)Typically financed with debt
• D)Ignored due to their great variability

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Definitions:

Land Improvements

Enhancements made to a parcel of land to increase its value or usability, such as landscaping, paving, or installation of utilities, which are typically considered depreciable assets.

Personal Property

Assets that are movable and not permanently attached to one location, including tangible items like furniture and intangible entities like intellectual property.

Units-of-Activity Method

A depreciation method where the expense is based on the number of hours used or units produced by an asset, rather than the passage of time.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.