Asked by
Roman Reings
on Dec 16, 2024Verified
Nord Company had $375000 of current assets and $150000 of current liabilities before borrowing $70000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on the amount of Nord Company's working capital?
A) No effect
B) $70000 increase
C) $140000 increase
D) $70000 decrease
Working Capital
A measure of a company’s liquidity; computed as current assets minus current liabilities.
Note Payable
A written agreement in which one party agrees to pay another party a definite sum of money at a future date or on demand.
Current Assets
Assets likely to be converted into cash, sold, or consumed within a year or the normal operating cycle of the business.
- Examine the effect of particular financial actions on liquidity ratios.
Verified Answer
SA
Learning Objectives
- Examine the effect of particular financial actions on liquidity ratios.