Rocket Corporation Entered into the Following Transactions: • the Accrual

question 30

Multiple Choice

Rocket Corporation entered into the following transactions: • The accrual of wages and salaries expense.
• The cash payment of a six-month note payable.
• The cash payment in advance for a one-year insurance policy.
Which of the following statements is correct with respect to determining Rocket's working capital? Assume that Rocket's operating cycle is four months.

• A)The accrual of wages and salaries expense decreases working capital.
• B)The cash payment of the note payable decreases working capital.
• C)The purchase of the insurance policy increases working capital.
• D)The cash payments for the note and insurance both decrease working capital.

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Definitions:

Synesthesia

A brain disorder where activating one sense or cognitive route automatically causes unintended experiences in another sense or cognitive route.

Kinesthesia

The ability to perceive the position, weight, or motion of muscles, tendons, and joints within the body.

Sensory Interaction

The principle that one sense may influence another, as when the smell of food influences its taste.

Vestibular Sense

Our sense of balance— our sense of body movement and position that enables our sense of balance.