Accounting for IGCSE & O level - Final Statements (Section 12 - No. 30)
What is the effect on working capital when a company pays off a short-term loan?
Decrease in current assets
Increase in current assets
Decrease in current liabilities
Increase in current liabilities
Paliwanag
Paying off a short-term loan decreases cash (current asset) and reduces the loan (current liability).