Question

A reserve of cash that can be drawn upon to meet operating expenses in the event of a slow month or two is a(n):

a) liabilities
b) line of credit
c) operating capital
d) Social Security fund

Answer 1

A reserve of cash for meeting operating expenses during slow periods is known as operating capital, which is an essential part of a company's assets to provide financial stability.

Step-by-step explanation:

A reserve of cash that can be drawn upon to meet operating expenses in the event of a slow month or two is known as operating capital. This is a crucial component of a company's assets and serves as a buffer against short-term financial shortfalls. It is not a liability, as liabilities represent debts or obligations. A line of credit could be used to obtain operating capital, but it in itself is not the reserve—it's a financial product that can provide access to funds. A Social Security fund is a government program intended to provide retirement, disability, and survivor benefits, and is not used for a business's operating expenses.