A company reported an increase in accounts payable and a decrease in inventory during 2010.Which of the following statements is correct?
A)Cash paid to suppliers equals cost of goods sold plus both the increase in accounts payable and the decrease in inventory.
B)Cash paid to suppliers equals cost of goods sold minus both the increase in accounts payable and the decrease in inventory.
C)Cash paid to suppliers equals cost of goods sold minus the increase in accounts payable, plus the decrease in inventory.
D)Cash paid to suppliers equals cost of goods sold plus the increase in accounts payable, minus the decrease in inventory.

Question

Quizplus · Accepted Answer

An increase in accounts payable is deducted because some inventory purchases weren't paid for; a decrease in inventory is deducted because cost of goods sold exceeds inventory purchases.

A Company Reported an Increase in Accounts Payable and a Decrease