Which of the Following Changes in Working Capital Is Least

question 79

Multiple Choice

Which of the following changes in working capital is least likely,given an increase in the overall level of sales?

• A) An increase in inventories
• B) An increase in accounts payable
• C) A decrease in accounts receivable
• D) An increase in accounts receivable

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Definitions:

Cost Flow Assumption

An accounting method used to value inventory and determine the cost of goods sold, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Net Realizable Value

The estimated selling price of goods, minus the costs of their sale or completion, used in determining the value of inventory on hand.

LIFO

An inventory valuation method standing for Last-In, First-Out, where the most recently acquired items are assumed to be sold or used first.

FIFO

FIFO (First In, First Out) is an inventory valuation method where the oldest inventory items are recorded as sold first.