Which of the Following Items Would Normally Be Excluded from the Computation

question 36

Multiple Choice

Which of the following items would normally be excluded from the computation of working capital?

• A) Advances from customers for goods that will be shipped three months after the balance sheet date
• B) The portion of long-term debt that matures six months after the balance sheet date and will be paid from the regular cash account
• C) Prepaid insurance
• D) Cash surrender value of life insurance

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Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method, or decision.

Representativeness Heuristic

A cognitive shortcut that involves making judgments based on how much one entity represents, or is similar to, another entity.

Insight

The capacity to gain an accurate and deep understanding of someone or something.

Analogy

A comparison between two things, typically for the purpose of explanation or clarification.