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Hello John,
Please help me with the following question.
During the year, Mason Co’s current assets increased by $120,000 and current liabilities
decreased by $50,000.
What was the effect on net working capital?
A Increased by $70,000
B Decreased by $170,000
C Increased by $170,000
D Decreased by $70,0001. Answer is C.
2. Please help on how to obtain the answer.. I’ve opted for D which is not correctI assume that you know the definition of working capital, and so did you try making up some figures yourself to see what happens??
On there own, increasing current assets by 120,000 will increase working capital by that amount.
On their own, decreasing current liabilities by 50,000 will also increase working capital by that amount..
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