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Which of the following items is not classified as working capital?

Economics
WAEC 2023

Which of the following items is not classified as working capital?

  • A. Fuel
  • B. Money to pay wages
  • C. Semi-finished goods
  • D. Equipment
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Correct Answer: Option D
Explanation

The answer is equipment. Working capital is the difference between a company's current assets and current liabilities. Current assets are those that can be converted into cash within a year, such as cash, accounts receivable, and inventory. Current liabilities are those that are due within a year, such as accounts payable and accrued expenses.

Equipment is a long-term asset, meaning that it is not expected to be converted into cash within a year. Therefore, it is not classified as working capital.

The other options, fuel, money to pay wages, and semi-finished goods, are all current assets and are therefore classified as working capital.

To summarize, the item that is not classified as working capital is equipment.


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