Which of the following rules stands true while preparation of Schedule of changes in workingcapital?
1) An increase in current assets increases working capital.
2) An increase in current assets decreases working capital.
3) An increase in current liabilities decreases working capital.
4) An increase in current liabilities increases working capital

Question

Quizplus · Accepted Answer

1) An increase in current assets increases working capital because it means the company has more resources available to cover its short-term obligations. 3) An increase in current liabilities decreases working capital because it indicates the company owes more in the short term, reducing the funds available for its operations.

Which of the Following Rules Stands True While Preparation of Schedule