Which of the Following Accounts May Reasonably Be Expected to Grow

question 42

Multiple Choice

Which of the following accounts may reasonably be expected to grow with sales? I. Accounts Receivable
II. Accounts Payable
III. Property, Plant and Equipment
IV. Inventory
V. Long-Term Debt

• A)I, II and IV
• B)I, II and V
• C)III and V
• D)I, II and III

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Definitions:

Current Assets

Current assets are short-term assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to fund its day-to-day operations.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the business's operating cycle, whichever is longer.

Reversing Entries

Entries recorded at the start of a new accounting cycle to negate or annul the effects of adjustments entered at the conclusion of the prior cycle.