Question

When total sources of funds is $Rs.3,30,000$ and total application of funds is $Rs.3,00,000$. These result in ____________.

• A. net increase in working capital by $Rs.30,000$
• B. net decrease in working capital by $Rs.30,000$
• C. net increase in working capital by $Rs.3,30,000$
• D. net decrease in working capital by $Rs.3,00,000$

Answer 1

Answer: (A)

net increase in working capital by $Rs.30,000$

Working Capital is the difference between current assets and current liabilities. Increase in working capital increase the sources of funds.

Therefore,

Sources of Funds- Application of Funds= Net Increase in working capital

Rs.3300000-Rs.300000

Net increase in working capital Rs.30000.