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

When considering net working capital, a project will generally need all of the following, except:

A decrease in accounts payable

A reduction in net sales

An increase in accounts receivable

An increase in inventory

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Verified step by step guidance

Step 1: Understand the concept of net working capital (NWC). Net working capital is calculated as current assets minus current liabilities. It represents the liquidity available to a business for day-to-day operations.

Step 2: Analyze the impact of each option on net working capital. For example, an increase in accounts receivable and inventory would increase current assets, thereby increasing NWC. A decrease in accounts payable would reduce current liabilities, also increasing NWC.

Step 3: Consider the option 'A reduction in net sales.' Net sales is not directly part of the calculation of net working capital, as it is related to revenue rather than current assets or liabilities. This makes it irrelevant to the calculation of NWC.

Step 4: Compare the options to identify which one does not align with the typical components of net working capital. Focus on the relationship between current assets and current liabilities.

Step 5: Conclude that the correct answer is the option that does not directly affect net working capital, which is 'A reduction in net sales.'