Choose given statement is true/false.

Working capital is the total sum of money that a company can spend without risk.

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True

False

answer is A.

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Detailed Solution

The Above Statement is true. Production requires various raw materials, such as the yarn used by the weaver and the clay used by the potter. Also, money is always needed during production to make payments and buy other necessary items. Raw materials and cash in hand are called working capital. Unlike tools, machines and buildings, these are used up in production. While working capital refers to the inventories of semi-finished commodities that will eventually be transformed into consumer goods, fixed capital refers to production assets like machinery, factories, and buildings.

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