What is the difference between current assets and current liabilities?
-
A.
Working capital -
B.
nominal capital -
C.
capital employed -
D.
issued capital
Correct Answer: Option A
Explanation
The difference between current asset and current liability is known as working capital which represents operating liquidity available to business. Working capital is the capital of a business which is used in its day-to-day trading operations, calculated as the current assets – the current liabilities.
Working capital, also known as net working capital, is the difference between a company’s current assets, like cash, accounts receivable (customers’ unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, like accounts payable.