The correct answer is: C. 1 is correct, but 2 is incorrect.
Working capital is the amount of funds necessary to cover the cost of operating the enterprise. It is calculated as current assets minus current liabilities. Current assets are assets that are expected to be converted into cash within one year, such as cash, accounts receivable, and inventory. Current liabilities are liabilities that are due within one year, such as accounts payable and short-term debt.
Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another. This is a broader definition of working capital that includes all current assets, not just those that are necessary to cover the cost of operating the enterprise.
Therefore, statement 1 is correct, but statement 2 is incorrect.