State three reasons of calling raw material and money as working capital

Asked by Kanhaiya | 27th Sep, 2015, 10:07: AM

Expert Answer:

Raw materials, stocks of goods and the money that has to be used to pay the wages of workers and to meet the day to day expenses come under working capital. They are called working capital because this type of capital is exhausted on being used just once or changes its form when it is used. The question of depreciation does not rise. It is employed again and again to continue the production. The owner gets back the working capital when the product is sold.

Answered by Tharageswari S | 28th Sep, 2015, 10:26: AM

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