Which of the following sets of data is sufficient to compute the amount of cash paid for goods?
A) Cost of goods sold, increase or decrease in inventory, increase or decrease in accounts payable.
B) Increase or decrease in cash, increase or decrease in inventory, increase or decrease in accounts payable.
C) Cost of goods sold, increase or decrease in accounts payable.
D) Cost of goods sold.

Question

Quizplus · Accepted Answer

The cost of goods sold will give us the total cost of goods sold during the period. The increase or decrease in inventory will tell us whether inventory has increased or decreased during the period, which affects the cash paid for goods (since an increase in inventory means less cash was paid for goods, while a decrease in inventory means more cash was paid for goods). The increase or decrease in accounts payable will tell us whether the company's payments to suppliers have increased or decreased during the period, which also affects the cash paid for goods (since a decrease in accounts payable means more cash was paid for goods, while an increase in accounts payable means less cash was paid for goods). Together, these three pieces of information are sufficient to calculate the amount of cash paid for goods.

Which of the Following Sets of Data Is Sufficient to Compute