Given a fixed level of sales and a constant profit margin,an increase in the accounts payable period can result from:
A)an increase in the cost of goods sold account value.
B)an increase in the ending accounts payable balance.
C)an increase in the cash cycle.
D)a decrease in the operating cycle.
E)a decrease in the average accounts payable balance.

Question

Quizplus · Accepted Answer

An increase in the accounts payable period means the company is taking longer to pay its suppliers for goods and services. If the level of sales and profit margin are constant, this delay could come from an increase in the ending accounts payable balance, indicating that the company is deferring payments to its suppliers. None of the other choices directly relate to an increase in the accounts payable period.

Given a Fixed Level of Sales and a Constant Profit