Question

1)At the end of 2018, a firm has $500 in Cash, $800 in Inventory, and $600 in Accounts Receivable. It also has $400 in Accounts Payable, $300 in Accrued Expenses, and $600 in Notes Payable. Which of the following is closest to the value of Net Working Capital for the firm for 2018?

Question 1 options:

	$600
	$900
	$1,200
	$1,900

-----

2)For a common-sized income statement, the values of all of the accounts on the income state are divided by:

	total revenues.
	total assets.
	the cost of goods sold.
	total equity.

Answer 1

Question 1

Net Working Capital = Current Assets - Current Liabilities

= (Cash + Inventory + Accounts Receivable) - ( Accounts Payable + Accrued Expenses + Notes Payable)

= (500+800+600)-(400+300+600)

= 1900-1300

= $600

​​​​​​​Question 2

Answer: total revenues

A common size income statement is an income statement in which each account is expressed as a percentage of the value of sales. That is the values of all of the accounts on the income state are divided by sales/total revenue.