From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Borrowed cash using a six-month note
A)Working capital will increase
B)Working capital will decrease
C)Working capital will not change

Question

Quizplus · Accepted Answer

Borrowing cash using a six-month note increases both current assets (cash) and current liabilities (note payable) by the same amount, leaving working capital (current assets minus current liabilities) unchanged.

From the Following Choices, Select the Answer That Describes the Effect