If the December 31, 2014, balance of accounts payable is lower than the January 1, 2014, balance, then the amount of cash payments will exceed the purchases on account for the year.

Question

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If the balance of accounts payable at the end of the year is lower than the beginning balance, it means that more payments were made towards accounts payable than new purchases on account were incurred during the year. This implies that the amount of cash payments exceeded the purchases on account for the year.

If the December 31, 2014, Balance of Accounts Payable Is