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cpt question

karthik (student) (26 Points)

25 December 2010

what is the working capital equation???

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(Guest)

Net working capital = current assets - current liabilities

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karthik (student) (26 Points)
Replied 25 December 2010

sir but in my cpt exam there was an option which said its total liabilities - outstanding liabilities ..this is causing my confusion

RAMA KRISHNA (Sr.Executive - Accts & Preparing for IPCC) (670 Points)
Replied 25 December 2010

Agree With Deepak

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(Guest)

This will make the concept of current liabilities more clear to you:

Current Liabilities
The definition of current liabilities, in contrast, is fairly simple. Current liabilities are those liabilities that might have to be paid any time soon. The payment date for current liabilities is not fixed and the debt might mature anytime. But then again, a long term loan is not and never will be a current liability, even if it has to be paid off tomorrow. Current liabilities are simply those liabilities which you might have to pay up for anytime. So typically current liabilities is the sum of the amount owed to creditors and, sometimes, bills payable.