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.
Which of the transactions for SRJ Corporation resulted in a decrease 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 accrual of interest expense and the reclassification of short-term debt to long-term debt.

Question

Quizplus · Accepted Answer

The accrual of interest expense increases current liabilities without affecting current assets, thus decreasing working capital.

SRJ Corporation Entered into the Following Transactions: • the Accrual