Question

Differentiate between fixed and working capital.

Answer 1

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Q- Differentiate between fixed and working capital.

Answer-

FIXED CAPITAL-

Meaning- Fixed capital refers to the investment of the enterprise in long term assets of the company.

Comprise of- Durable goods whose useful life is more than one accounting period.

Liquidity- Comparatively illiquid.

Uses- Used to buy non-current assets for business.

Serves- Strategic objectives

WORKING CAPITAL-

Meaning- Working capital means the capital invested in the current assets of the company.

Comprise of- Short term assets and liabilities

Liquidity- Highly liquid.

Uses- Used for short term financing.

Serves- Operational objectives

Answer 2

Answer: fixed capital can be used for a long period of time for example table, chair, etc. And working capital are human who utilise the fixed capital.

Explanation: