Suki buys a non-current asset for £6850 for use in her business.She pays for it out of the business bank account.Which one of the following statements is correct?

Question

Quizplus · Accepted Answer

When Suki buys a non-current asset for £6850 from the business bank account, it means the cash (a current asset) decreases by that amount, which leads to a decrease in working capital. Working capital is calculated as current assets minus current liabilities, so a reduction in current assets (like cash) results in a decrease in working capital.

Suki Buys a Non-Current Asset for £6850 for Use in Her