Which statement describes funds used to cover day-to-day operations? (Alternate wording)

• A. Working Capital / Operating Capital
• B. Fixed Capital / Physical Capital
• C. Start-up Capital
• D. Financial Capital

Answer: (A)

The funds used to cover day-to-day operations are working capital, often called operating capital. This is the liquidity a business needs to pay ongoing expenses like payroll, rent, utilities, and supplies, keeping the daily operations running. In basic terms, it’s current assets minus current liabilities, showing how much cash or liquid resources are available for short-term needs. Fixed capital refers to long-term assets like buildings and equipment, which aren’t used for daily expenses. Start-up capital is the initial money to start a business, not the ongoing operating funds. Financial capital is a broad term for money used for investments or funding, not specifically for daily operations. So the description of funds for day-to-day operations aligns with working capital.