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

question 86

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 these will cause a firm's net working capital to decrease.

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Definitions:

Selling and Administrative Costs

Expenses related to the sales process and overall management of a company, excluding production costs.

Target Cost

The maximum amount that can be spent on a product in order to generate the desired profitability level.

Cost-Plus Approach

A pricing strategy where a fixed percentage or fixed amount is added to the cost of producing a product or service to determine its selling price.

Markup

The amount added to the cost of goods to cover overhead and profit, represented as a percentage of cost or a fixed amount.