Question

A firm has current assets of ₹8 lakh and current liabilities of ₹5 lakh. If it collects ₹1 lakh from debtors and uses it to pay creditors, what happens to working capital?

A Increases by ₹1 lakh
B Decreases by ₹1 lakh
C No change
D Increases by ₹2 lakh
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