A Decrease in [Blank] Would Increase Net Working Capital

question 18

Multiple Choice

A decrease in [blank] would increase net working capital.

• A)accounts payable
• B)accounts receivable
• C)cash
• D)equipment

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Definitions:

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life to account for declines in value over time.

Residual Value Guarantee

A commitment to ensure that an asset will have a specified value at the end of its lease term.

Present Value

The present value of a future amount of money or series of cash flows, calculated using a given interest rate.

Minimum Lease Payments

The lowest amount that a lessee is expected to pay over the lease term for the right to use an asset.