Working capital would not be used to pay for:
A) advertising expense.
B) what it costs to store inventory.
C) what a firm owes suppliers.
D) employee salaries.
E) the cost of new facilities.

Question

Quizplus · Accepted Answer

Working capital is used to cover the day-to-day expenses of a business, such as inventory and salaries, and to pay suppliers. However, the cost of new facilities, such as purchasing or constructing a new building, would be a capital expenditure and therefore not covered by working capital. Advertising expenses would also be covered by operating expenses, not working capital.

Working Capital Would Not Be Used to Pay For