What Does Working Capital Measure

question 133

Multiple Choice

What does working capital measure?

• A) the excess of a business's assets over its liabilities
• B) the excess of a business's current assets over its liabilities
• C) the excess of a business's current assets over its current liabilities
• D) the excess of a business's net income over its current liabilities

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Definitions:

Cash Payments Journal

A business ledger that documents every cash expenditure or payment conducted by a company.

Purchases Journal

A purchases journal is a special journal used in accounting to record all purchases of merchandise, supplies, or other assets on credit.

Horizontal Analysis

Financial analysis that compares an item in a current statement with the same item in prior statements.

Vertical Analysis

An analysis that compares each item in a current statement with a total amount within the same statement.