Interpretation of Accounts Using Simple Accounting Ratios Equity: Working Capital - SS2 Accounting Past Questions and Answers - page 1
1
What is working capital?
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A
The amount of money a business has available to fund its day-to-day operations.
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B
The amount of money a business has invested in long-term assets.
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C
The amount of money a business owes to its suppliers.
D
The amount of money a business has in its bank account.
2
What are current assets?
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A
Assets that can be quickly converted into cash.
B
Assets that are used for long-term investments.
C
Assets that a business has sold in the past year.
D
Assets that a business plans to sell in the future.
3
Why is managing working capital important for businesses?
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A
It helps businesses cover their short-term expenses.
B
It ensures businesses have enough money to invest in long-term assets.
C
It helps businesses reduce their taxes.
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D
It helps businesses increase their profits.
4
What can happen if a business does not have enough working capital?
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A
It may struggle to pay its bills and could face bankruptcy.
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B
It may have too much cash on hand.
C
It may have to pay more taxes than necessary.
D
It may have difficulty finding customers.
6
Why is too much working capital not always a good thing for a business?
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