Which of the Following Statements Is Correct

question 39

Multiple Choice

Which of the following statements is correct?

• A)A decrease in NWC involves either a reduction in current assets, which generates cash, or an increase in current liabilities, thereby freeing up the shareholder's cash for other things.
• B)A decrease in NWC involves either an increase in current assets, which generates cash, or a decrease in current liabilities, thereby freeing up the shareholder's cash for other things.
• C)An example of an increase in a net working capital is to buy more machines or another plant.
• D)None of these statements are correct.

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Definitions:

Under IFRS

Refers to the accounting and reporting standards under the International Financial Reporting Standards framework, used globally.

Equity

The ownership interest held by shareholders in a corporation, represented by the residual assets of the company after deducting liabilities.

Shareholders' Funds

The total value of all a company's assets minus its liabilities, representing the equity ownership of shareholders.

Authorized

The formal approval or sanction for an action or the maximum amount of capital stock that a company can issue as authorized by its corporate charter.