As of December 31, 2012, Grove Corporation had a current ratio of 1.29, quick ratio of 1.05, and working capital of $18,000. The company uses a perpetual inventory system and sells merchandise for more than it cost. On January 1, 2012, Grove collected $5,200 of accounts receivable. As a result of this transaction, Grove's working capital will:
A)Increase.
B)Remain the same.
C)Decrease.
D)Cannot be determineD.The transaction will increase one current asset (cash) and decrease another current asset (accounts receivable). Current assets do not change; therefore working capital will not change.

Question

Quizplus · Accepted Answer

The transaction only involved the exchange of one current asset for another (cash for accounts receivable), so the working capital of Grove Corporation will remain the same.

As of December 31, 2012, Grove Corporation Had a Current