Question

The Working Capital (or Net Current Assets) of a business is ___________.

• A. current assets less current liabilities
• B. capital plus liabilities which are not expected to be paid within a year of the balance sheet date
• C. the capital introduced by the proprietor at commencement of business
• D. non current assets plus current assets less current liabilities

Answer 1

The correct option is A current assets less current liabilities

Working Capital is that capital which is required for day to day operation of the business. Its basically the fund required for a business cycle. Working Capital is the difference between Current Assets and Current Liabilities.

Current Assets: (A)

Cash on Hand

Cash at Bank

Sundry Debtors

Bills Recievables

Inventory

Current Liabilities: (B)

Sundry Creditors

Bills Payable

Bank Overdraft

Working Capital: A-B.