If the firm's current liabilities in December were $40,000,the net working capital was ________.(See Table 14.1)
A)$140,000
B)$60,000
C)$10,000
D)-$10,000

Question

Quizplus · Accepted Answer

Net working capital = Current assets - Current liabilities 
Since the question does not provide information about current assets, we cannot determine the exact value of net working capital. However, we know that current liabilities are $40,000, so if current assets were also $40,000, then net working capital would be $0. If current assets were more than $40,000, then net working capital would be positive. 
Therefore, the minimum value of net working capital is -$40,000 (if current assets are $0), but since answer choices only provide positive values, the best choice is C, which assumes that current assets are $50,000, resulting in net working capital of $10,000.

If the Firm's Current Liabilities in December Were $40,000,the Net