Working Capital Is Computed As

question 97

Multiple Choice

Working capital is computed as:

• A) Long-term assets - Long-term liabilities.
• B) Current assets ¸ Current liabilities.
• C) Current assets - Long-term assets.
• D) Current assets - Current liabilities.

---

Definitions:

Vertical Analysis

A financial analysis method in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account.

Financial Statement

A summary report that quantitatively describes the financial health of a company. This includes the balance sheet, income statement, and statement of cash flows.

Deferrals

Accounting method that involves postponing the recognition of certain revenues or expenses until a later accounting period to match them with the period they affect.

Accruals

Expenses and revenues that have been incurred or earned but not yet recorded in the accounts.