Question

an increase in Inventory of rupees 500 and a decrease in the bank balance of rupees 600 and and increase in payable of rupees 1400 result is 1)a decrease in working capital of Rupees 1500 2) an increase in working capital Rupees 1500 3)decrease in working capital 1300. 4) increase in working capital 1300​

Answer 1

Answer:

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Answer 2

an increase in Inventory of rupees 500 and a decrease in the bank balance of rupees 600 and and increase in payable of rupees 1400 result is

The correct option is  1)a decrease in working capital of Rupees 1500

Explanation:

As we know that

The working capital = Current assets - current liabilities

Since the inventory is increased for Rs 500 along with the bank balance of rupees 600 decrease and the account payable is also increased for Rs. 1400

The current assets is

= -Rs. 600 + Rs 500

= -Rs 100

And, the current liabilities is

= -Rs 1400

Now the working capital is

= -Rs 100 + (-Rs 1400)

= -Rs 1500

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