A consulting firm provided services last month and billed its client. This month, the company received payment from the customer. What impact does this month's transaction have on the firm's working capital?
A)increase
B)decrease
C)no net effect
D)Unable to determine with this limited information.

Question

Quizplus · Accepted Answer

Receiving payment from the customer impacts the firm's cash and accounts receivable. Cash increases while accounts receivable decreases by the same amount, leaving the working capital (current assets minus current liabilities) unchanged.

A Consulting Firm Provided Services Last Month and Billed Its