All of the Following Will Result in an Increase in Net

question 72

Multiple Choice

All of the following will result in an increase in net working capital except _________.

• A) An increase in inventory
• B) A decrease in accounts payable
• C) An increase in cash
• D) An increase in accruals

Recognize the criteria for the recognition of elements in financial statements.

Comprehend financial flexibility and liquidity and their significance in financial analysis.

Identify assets likely to be reported at historical cost on the balance sheet.

Understand the concept and practical implications of liabilities in financial contexts.

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Definitions:

Economic Profit

The profit a business makes after deducting both its explicit and implicit costs, not just its operational expenses.

Profit Maximizing

A process by which a firm determines the price and output level that returns the greatest profit.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, or loan payments.

Short-Run Profit

The profit earned by a firm in the short term, typically considering only variable costs and fixed costs remaining constant.