Multiple choice

Machinery purchased by cheque is

  1. source of funds

  2. application of funds

  3. inflow of funds

  4. increase in working capital

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It is the application of funds. It would decrease the balance in bank account. The decrease in current assets means decrease in working capital and the decrease in working capital indicates that there is application of funds. Working capital is excess of current assets over current liabilities.