SRJ Corporation entered into the following transactions: • The accrual of interest expense on a six-month note payable.
• Collected cash for services to be provided within the next six months.
• The reclassification of short-term debt to long-term debt.
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Which of the transactions for SRJ Corporation resulted in an increase in working capital?
A)The accrual of interest expense.
B)Collecting cash for services to be provided in the future.
C)The reclassification of short-term debt to long-term debt.
D)Both the reclassification of short-term debt to long-term debt and the collection of cash for future services.

Question

Quizplus · Accepted Answer

Reclassifying short-term debt to long-term debt increases working capital by reducing current liabilities, while collecting cash for future services increases current liabilities (unearned revenue), thus not increasing working capital.

SRJ Corporation Entered into the Following Transactions: • the Accrual