Smith Corporation Entered into the Following Transactions: • Purchased Inventory

Smith Corporation entered into the following transactions: • Purchased inventory on account.
• Collected an account receivable.
• Purchased equipment using cash.
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Which of the following statements about Smith's transactions is correct?

A) The inventory purchase on account increased working capital.
B) Collecting an account receivable increases working capital.
C) The equipment purchase decreases working capital.
D) The inventory purchase on account decreases working capital.

Correct Answer:

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