Accounting for IGCSE & O level - Final Statements (Section 7 - No. 49)
What is the impact of cash sales on a company's working capital?
Decreases working capital.
Increases working capital.
Has no effect on working capital.
Can either increase or decrease working capital depending on the amount.
Explanation
Cash sales increase cash and decrease inventory (both current assets). Therefore, working capital is unchanged.
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