Which of the following will be affected by a reclassification of liabilities from current to non-current?
A) total assets
B) total liabilities
C) working capital
D) inventory turnover

Question

Quizplus · Accepted Answer

Reclassifying liabilities from current to non-current affects working capital because working capital is calculated as current assets minus current liabilities. Changing the classification of liabilities alters the current liabilities amount, thereby impacting the working capital calculation. Total assets and total liabilities remain unchanged because the reclassification does not affect the overall amount, just the classification within liabilities. Inventory turnover is unrelated to the classification of liabilities, as it involves inventory and cost of goods sold figures.

Which of the Following Will Be Affected by a Reclassification