Which of the following will decrease working capital?
A) collection of accounts receivable
B) purchase of a new computer with cash
C) payment of salaries payable
D) purchase of merchandise on credit

Question

Quizplus · Accepted Answer

The purchase of a new computer with cash will decrease working capital as it involves an outflow of cash from the company. The options A, C, and D all involve inflows or outflows of cash that do not necessarily impact working capital. Collection of accounts receivable will increase cash but may not necessarily increase working capital if it is used to pay off other liabilities. Payment of salaries payable and purchase of merchandise on credit will decrease cash but may not necessarily decrease working capital as these are day-to-day operational expenses that can be offset by cash inflows from other sources.

Which of the Following Will Decrease Working Capital