Which of the Following Transactions Will Cause Net Working Capital

question 170

Multiple Choice

Which of the following transactions will cause net working capital to decrease?

• A)Inventory is purchased on credit.
• B)The firm declares and pays a cash dividend.
• C)An account payable is paid with cash.
• D)Inventory is sold for cash.
• E)None of the above would cause net working capital to decrease.

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Definitions:

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for competition based on factors other than just price, such as brand and quality.

Demand Curves

Graphical representations that show the relationship between the price of a good or service and the quantity demanded by consumers at various price levels.

Incumbent Firms

Established companies that currently dominate a sector or industry.

New Firms

Newly established business entities that often bring innovation, competition, and dynamism to their respective markets.