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NEW QUESTION: 1
During 1990, Mason Company's current assets increased by $120, current liabilities decreased by $50,
and net working capital:
A. Increased by $70.
B. Decreased by $170.
C. Increased by $170.
D. Decreased by $70.
Choice "c" is correct. Net working capital is the difference between current assets and current liabilities.
Because current assets went up $120 and current liabilities down by $50, the net effect is an increase in
net working capital of $170.
Therefore, working capital has increased $170,000.
Choices "a", "b", and "d" are incorrect, per the above calculation.
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