What is work capital
and
What is fixed capital
Economics class 9
Answers
Explanation:
Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization, or other entity, including governmental entities.
In economics and accounting, fixed capital is any kind of real, physical asset that is used in the production of a product but is not used up in the production.
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In business,fixed capital refers to the fund or capital which is intended to purchase fixed assets in the business and working capital is the regular or day to day financing to conduct business operations.
Explanation:
Fixed capital is allocated by businesses or firms to acquire the non-regular assets or fixed assets in the business such as building,machinery,initial purchases in businesses etc.Hence,it is a part of the initial investment or funding in the business to purchase long term and fixed assets and not used for regular or day to day business activities or operations.
On the other hand,working capital is intended to fund the regular day to day activities and operations of any business or firm.It might be used for regular business purposes like paying short term expenses,day to day expenses,operating expenses,current payable liabilities etc.