Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which of the following accounts are included in the calculation of net working capital?

Accounts Payable

Accounts Receivable

Equipment

Retained Earnings

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Verified step by step guidance

Step 1: Understand the concept of net working capital. Net working capital is calculated as Current Assets minus Current Liabilities. It represents the liquidity available to a company for day-to-day operations.

Step 2: Identify which accounts are classified as Current Assets. Current Assets typically include accounts such as Accounts Receivable, Cash, Inventory, and Prepaid Expenses. Equipment is not a Current Asset; it is classified as a long-term asset.

Step 3: Identify which accounts are classified as Current Liabilities. Current Liabilities typically include accounts such as Accounts Payable, Short-term Debt, and Accrued Expenses. Retained Earnings is not a Current Liability; it is part of equity.

Step 4: Determine which accounts from the list provided are relevant to the calculation of net working capital. Accounts Receivable is a Current Asset, and Accounts Payable is a Current Liability. These two accounts are included in the calculation of net working capital.

Step 5: Exclude accounts that are not relevant to the calculation. Equipment is a long-term asset and Retained Earnings is part of equity, so neither is included in the calculation of net working capital.