Working Capital

Working capital is the difference between current assets and current liabilities. It measures the company’s short-term financial health and its ability to pay obligations due within one year.

Working capital is the difference between current assets and current liabilities. It measures the company's short-term financial health and its ability to pay obligations due within one year.

- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.

- Example: Accountants use **Working Capital** when recording transactions and preparing the trial balance.

- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.