The excess of current assets over current liabilities is called:
Correct answer: A. Working Capital
- A. Working Capital
- B. Circulating capital
- C. Fixed capital
- D. Trading capital
Explanation
Working capital is calculated as current assets minus current liabilities and indicates the short-term operating cushion. Fixed capital is invested in long-term assets, not the excess of current assets over current liabilities.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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