Of the following items,which would be considered working capital as opposed to a capital asset?
A)Disposable parts that aid in installation and are shipped with each sale
B)A CAD/CAM machine used in the manufacturing process
C)An addition to the existing building designed to facilitate a new product line
D)None of the above are working capital assets.

Question

Quizplus · Accepted Answer

Disposable parts that aid in installation are considered working capital because they are used up or sold within a short period of time (less than one year) and are part of the company's day-to-day operations.

Answer: B
 A CAD/CAM machine is a capital asset because it has a long useful life (more than one year) and is used in the production of goods over an extended period.

Answer: C
 The addition to the existing building designed to facilitate a new product line is considered a capital asset because it has a long useful life and will provide future economic benefits to the company.

Of the Following Items,which Would Be Considered Working Capital as Opposed