Which one of the following changes in working capital is least likely if sales increase?
A) An increase in inventories
B) An increase in accounts payable
C) A decrease in accounts receivable
D) An increase in notes payable

Question

Quizplus · Accepted Answer

An increase in sales should lead to an increase in accounts receivable because more customers are buying on credit, which means they owe the company money. Increases in inventories (A) may occur as the company produces more to meet demand, and an increase in accounts payable (B) may occur as the company buys more materials or inventory on credit. However, a decrease in accounts receivable (C) would be unlikely in this scenario. An increase in notes payable (D) may occur if the company needs to borrow money to finance the growth in sales.

Which One of the Following Changes in Working Capital Is