Which of the Following Accurately Describes Working Capital

question 71

Multiple Choice

Which of the following accurately describes working capital?

• A)Current assets minus inventory
• B)Total debt minus shareholders' equity
• C)Current assets minus current liabilities
• D)Cost of sales divided by average inventory

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Definitions:

Internal Control Steps

Procedures and mechanisms implemented by a firm to safeguard assets, enhance the reliability of financial reports, and comply with laws.

Reverse Order

A method of organizing or sequencing items so that the last becomes first and the first becomes last.

Last-In, First-Out

An inventory management and valuation method where the most recently produced or acquired items are sold or used first.

Perpetual Inventory System

An inventory tracking system that updates the balance of inventory continuously with each sale or purchase.