working-capital adjustment

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A current-cost accounting adjustment made to the working capital of a business. Bank balances and overdrafts may fluctuate with the volume of stock held, the debtors, and the creditors. If the bank balances and overdrafts arise from such fluctuations, they too should be included in the monetary working capital, together with any cash required to support the daily operations of the business.

Subjects: Accounting.

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