Multiple choice

Calculate the working capital from the following information: Stock = Rs. 5,000 Debtors = Rs. 4,000 Cash at Bank = Rs. 3,000 Creditors = Rs. 3,000 Overdraft = Rs. 1,000 Outstanding liabilities = Rs. 500

  1. Rs. 8,000

  2. Rs. 7,500

  3. Rs. 8,500

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It is Rs. 7,500 The working capital is excess of current assets over current liabilities. Current assets are stock, debtors and cash at bank.
The stock is of Rs. 5,000; Debtors are of Rs. 4,000; Cash at Bank is of Rs. 3,000. Hence, total current assets = Rs. 5,000 + Rs. 4,000 +  Rs. 3,000 =  Rs. 12,000 Current liabilities are creditors, overdraft and outstanding liabilities. Hence, total current liabilities = Rs. 3,000 + Rs. 1,000 +  Rs. 500  = Rs. 4,500 Therefore, working capital is of Rs. 12,000 -  Rs. 4,500 = Rs. 7,500

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