A company paid $22,000 for goods it had purchased last month for resale. What is the effect of the payment?

Question

Quizplus · Accepted Answer

The payment of $22,000 for goods purchased last month represents a decrease in the accounts payable account, as this liability was settled by the payment. This payment does not affect inventory or cost of goods sold, as those accounts are impacted when goods are sold, not when they are purchased.

A Company Paid $22,000 for Goods It Had Purchased Last