Nord Company had $375000 of current assets and $150000 of current liabilities before borrowing $70000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on the amount of Nord Company's working capital?
A) No effect
B) $70000 increase
C) $140000 increase
D) $70000 decrease

Question

Quizplus · Accepted Answer

Working capital is calculated as current assets minus current liabilities. Borrowing $70,000 increases both current assets and current liabilities by the same amount, leaving working capital unchanged.

Nord Company Had $375000 of Current Assets and $150000 of Current