Eagle's Nest Sold Equipment for $4,000 Cash

question 131

Multiple Choice

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

• A)Reduces working capital
• B)Increases working capital
• C)Has no effect on working capital
• D)The increases offset the decrease.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues, indicating the net earnings attributable to shareholders.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use.

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of a company, reflected in its statement of cash flows.

Operating Activities

Daily activities of a business related to producing and delivering its products and services, which generate the majority of a company's cash flow.