A-LevelAccountingFinancial Ratios and Working Capital ManagementOct/Nov 2011Paper 1 Q181 Mark
When is working capital most likely to increase?
Awhen the business increases its selling prices
Bwhen the credit period allowed to customers is reduced
Cwhen the credit period taken from suppliers is increased
Dwhen the value of inventory decreases
✓ Correct Answer
The correct answer is A: when the business increases its selling prices
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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