# Quiz 33 – Working Capital – (Answers)

Note – Please take our quiz ‘Quiz 33 – Working Capital – (Answers)‘ on this page before going through the below answers. Only the top 3% of our audience scored 10/10 in all of them.

• Name – Quiz 33 – Working Capital – (Answers)
• Topic – Working Capital

##### Q1. Bank overdraft has an impact on the company’s working capital.

Ans. The given statement is True. Bank overdraft is a current liability therefore it has an impact on total working capital.

##### Q2. High working capital is always a good thing for the business.

Ans. The given statement is False. High working capital may indicate a lot of idle current assets. In such a case it is always subject to scrutiny and it may or may not be favourable always.

##### Q3. Prepaid expenses are counted in working capital.

Ans. The given statement is True. ‘Prepaid expenses’ are current assets therefore they are counted while calculating the working capital of a company.

##### Q4. _____ does not form part of working capital.

Ans.  Debentures are long-term liabilities therefore they do not form part of working capital. Also, the current portion of long-term debt becomes a current liability in the current accounting period.

##### Q5. Working Capital is mostly used to pay long-term expenses.

Ans. The given statement is False. Working capital is mostly used to pay day-to-day activities of an organization.

##### Q6. Current Assets = 5,000, Current Liabilities = 3,000, Gross Loss = 2,000, Working Capital = _____.

Ans. WC = CA – CL which in this case translates to 5,000 – 3,000 = 2,000.

##### Q7. Positive working capital is mostly bad for a company.

Ans. Positive working capital means current assets are greater than current liabilities, which in most cases is good news for the company.

##### Q8. Working Capital helps measure _____ of an entity.

Ans. Usually, working capital is meant for checking the liquidity of an entity.

##### Q9. Working capital is also known as _____.

Ans. It is also known as working assets.

##### Q10. Which financial statement is used to calculate the working capital?

Ans. The balance sheet shows current assets and current liabilities which are necessary to calculate the working capital.

##### Q11. Working Capital = Current Assets – _____.

Ans. Working capital is equal to current assets less current liabilities.

##### Q12. Working capital is the capital that is _____ in a company’s day-to-day operations.

Ans. It is part of a company’s total capital used or employed in everyday operations.

###### Subscribe
* indicates required