Economics · Financial Statements
From a financial accounting perspective, what is the primary impact of an increase in raw material inventory levels on a company's financial statements in the short term?
- 1It reduces the net working capital.
- 2It increases the current assets on the balance sheet.✓
- 3It increases the liabilities on the balance sheet.
- 4It immediately decreases the cost of goods sold.
Correct answer
It increases the current assets on the balance sheet.
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