Multiple choice

Directions: State whether the following statement is True Or False.

Cash or credit sales at a profit increase the working capital.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Working capital is current assets minus current liabilities. When cash or credit sales occur at a profit, current assets either increase through cash or accounts receivable by an amount greater than or equal to cost, thereby increasing net working capital.

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