\"A corporation is considering expanding operations to meet growing demand. With

Question

"A corporation is considering expanding operations to meet growing demand. With the capital expansion the current accounts are expected to change. Management expects cash to increase by $10,000, accounts receivable by $20,000, and inventories by $30,000. At the same time accounts payable will increase by $40,000, accruals by $30,000, and long term debt by $80,000. The change in net working capital is"

an increase of $10,000"

" an increase of $80,000"

" a decrease of $90,000"

" a decrease of $10,000"

an increase of $10,000"

" an increase of $80,000"

" a decrease of $90,000"

" a decrease of $10,000"

Explanation / Answer

Net Working Capital=Current Assets-Current Liabilites

=$10000+$20000++$30000-$40000-$30000=$60000-$70000=-$10000

Hence A decrease of $10000, Therefore D is Correct

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