Financial statement forecasts rely on additivity within financial statements and articulation across financial statements.Given this information forecasts of future growth in inventory will most likely affect growth in:
A) accounts receivables.
B) accounts payable.
C) depreciation.
D) salary payable.

Question

Quizplus · Accepted Answer

Inventory growth will require additional funds to finance the purchase of inventory, which will likely result in an increase in accounts payable as the company will need to delay payment to suppliers in order to free up cash for inventory purchases. Growth in inventory would not directly impact accounts receivable, depreciation, or salary payable.

Financial Statement Forecasts Rely on Additivity Within Financial Statements and Articulation