An example of an item which is NOT an element of working capital is
A) accrued interest on notes receivable.
B) goodwill.
C) inventory.
D) short-term investments.

Question

Quizplus · Accepted Answer

Goodwill is an intangible asset that is recorded on the balance sheet, but it is not considered part of working capital. Working capital is the difference between current assets (such as inventory, accounts receivable, and cash) and current liabilities (such as accounts payable and accrued expenses), which represents the funds available to a company to meet short-term obligations. Accrued interest on notes receivable, inventory, and short-term investments are all considered part of working capital as they can be readily converted to cash within a year or less.

An Example of an Item Which Is NOT an Element