Answer (B) is correct . Working capital is the net of current assets and current liabilities. When merchandise is purchased on credit, inventory (a current asset) is increased, and accounts payable (a?current liability) is increased by the same amount. Thus, no net change in working capital results.
Answer (A) is incorrect because Current assets are increased by the amount of inventory purchased.
Answer (C) is incorrect because Current liabilities are increased by the amount of the credit purchase.
Answer (D) is incorrect because The numerator (current assets) and the denominator (current liabilities) of the current ratio are increased by the same amount.
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