Which One of the Following Will Decrease the Net Working

question 104

Multiple Choice

Which one of the following will decrease the net working capital of a firm? Assume that the current ratio is greater than 1.0.

• A)Selling inventory at a profit
• B)Collecting an accounts receivable
• C)Paying on a long-term debt
• D)Selling a fixed asset for book value
• E)Paying an accounts payable

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Definitions:

Assertion

An assertive declaration of truth or conviction.

Mutual Mistake

A legal concept where both parties involved in a contract have a misunderstanding about an essential fact of the agreement, potentially making the contract voidable.

Fair Market Value

The price at which an asset would exchange hands between a willing buyer and seller, each having reasonable knowledge of the relevant facts, and neither being under compulsion to transact.

Breach of Contract

Occurs when one party fails to fulfill their obligations under a contract, allowing the other party to seek legal remedies.