[amp_mcq option1=”Cash purchase of goods” option2=”Cash purchase of machine” option3=”Purchase of machine by cheque” option4=”Sale of old machine by cheque” correct=”option1″]<\/p>\n
The correct answer is: A. Cash purchase of goods<\/strong><\/p>\n Working capital is the difference between a company’s current assets and its current liabilities. Current assets are assets that can be converted into cash within one year, such as cash, accounts receivable, and inventory. Current liabilities are liabilities that must be paid within one year, such as accounts payable and short-term debt.<\/p>\n When a company purchases goods for cash, the current assets (cash) increase and the current liabilities (accounts payable) decrease. This has no net effect on working capital.<\/p>\n When a company purchases a machine for cash, the current assets (cash) decrease and the fixed assets (machine) increase. This has a negative effect on working capital.<\/p>\n When a company purchases a machine by cheque, the current assets (cash) decrease and the current liabilities (accounts payable) increase. This has no net effect on working capital.<\/p>\n When a company sells an old machine by cheque, the current assets (cash) increase and the fixed assets (machine) decrease. This has a positive effect on working capital.<\/p>\n Therefore, the only option that does not change working capital is A.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Cash purchase of goods” option2=”Cash purchase of machine” option3=”Purchase of machine by cheque” option4=”Sale of old machine by cheque” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-51361","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n