During a period cost of goods sold + an increase in inventory + an increase in accounts payable = cash paid to suppliers.

Question

Quizplus · Accepted Answer

During a period, the cost of goods sold represents the cost of inventory that was sold, not the total inventory purchased. Therefore, an increase in inventory does not necessarily mean that there was an increase in the cost of goods sold. Additionally, an increase in accounts payable means that the company has purchased goods on credit but has not yet paid for them, so this does not represent cash paid to suppliers. Therefore, this formula is not accurate.

During a Period Cost of Goods Sold + an Increase