Which of the Following Statements Regarding Investment in Working Capital

question 29

Multiple Choice

Which of the following statements regarding investment in working capital is incorrect?

• A) An investment in working capital, unlike an investment in plant and equipment, represents a positive cash flow when the investment is made.
• B) Net working capital cash flow is measured by the change in working capital, not the level of working capital.
• C) Net working capital may change during the life of a project.
• D) Working capital is generally recovered at the end of a project.

---

Definitions:

Periodic

Occurring or recurring at regular intervals, often used to describe payments, reviews, or assessments.

Freight-In

A cost of goods sold account that records the shipping cost to the buyer.

Merchandise Inventory

Goods or products that a company holds for the purpose of reselling to customers.

Sales Returns & Allowances

A reduction in sales revenue that occurs when customers return products or receive discounts for unsatisfactory goods.