Starrs Company has current assets of $300,000 and current liabilities of $200,000.Which of the following transactions would increase its working capital?
A) Prepayment of $50,000 of next year's rent.
B) Refinancing $50,000 of short-term debt with long-term debt.
C) Acquisition of land valued at $50,000 by issuing new common shares.
D) Purchase of $50,000 of marketable securities for cash.

Question

Quizplus · Accepted Answer

Refinancing $50,000 of short-term debt with long-term debt decreases current liabilities, thereby increasing working capital.

Starrs Company Has Current Assets of $300,000 and Current Liabilities