Which of the Following Actions Will Cause a Firm's Net

question 32

Multiple Choice

Which of the following actions will cause a firm's net working capital to decrease?

• A) The firm relaxes its credit policy.
• B) The firm increases its usage of accruals.
• C) The firm pays off a short-term bank loan with cash.
• D) None of the options will cause a firm's net working capital to decrease.

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Definitions:

Backcountry

In colonial America, the area stretching from central Pennsylvania southward through the Shenandoah Valley of Virginia and into upland North and South Carolina.

Market Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

Plantation Mistresses

Women who lived on and managed plantations in the southern United States during the antebellum period, often overseeing domestic aspects of plantation life.

Domestic Servants

Workers employed within the household, performing various chores and tasks such as cooking, cleaning, and childcare.