Rocket Corporation Entered into the Following Transactions

question 90

Multiple Choice

Rocket Corporation entered into the following transactions:
The accrual of wages and salaries expense.
The cash payment of a six-month note payable.
The cash payment in advance for a one-year insurance policy.
Which of the following statements is correct with respect to determining Rocket's working capital? Assume that Rocket's operating cycle is four months.

• A)The accrual of wages and salaries expense decreases working capital.
• B)The cash payment of the note payable decreases working capital.
• C)The purchase of the insurance policy increases working capital.
• D)The cash payments for the note and insurance both decrease working capital.

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Definitions:

Political Ethics

The practice of making moral considerations about political action and political systems.

Administrative Agencies

Governmental bodies responsible for enforcing laws, creating regulations, and overseeing specific administrative areas.

Promulgate Regulations

The act of formally declaring or announcing new rules or laws, often by a government or authoritative body, to enforce compliance.

Judicial Branch

The branch of government responsible for interpreting the law, composed of courts and judges, and has the power to decide legal disputes and ensure justice.