Working capital increases when a company purchases equipment and signs a 2-year note payable.

Question

Quizplus · Accepted Answer

Working capital is the difference between a company's current assets and current liabilities. Purchasing equipment would increase the company's fixed assets, which do not affect working capital. Signing a 2-year note payable would increase the company's current liabilities, decreasing working capital. Therefore, the statement is false.

Working Capital Increases When a Company Purchases Equipment and Signs