A business enterprise holds inventory of $7 000, trade receivables of$ 13 000 and cash at bank of $10 000. Its only current liability is trade payables of$ 11 000. What is the working capital of the enterprise?

A$11 000

B$19 000

C$30 000

D$41 000

Explanation: Working capital is current assets less current liabilities. The current assets total

7 000 +

13 000 +

10 000 =

30 000, and the current liabilities are

11 000, so the working capital is

30 000 -

11 000 =

19 000. The

30 000 figure is the current assets alone and

41 000 wrongly adds the payables instead of deducting them.

Derived from ZIMSEC Business Enterprise Skills Paper 2, Nov 2020, Q1

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