The effect of an increase in a firm's accounts payable during the year,assuming that the current asset portion of the balance sheet remains the same,is

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An increase in accounts payable means that the firm has purchased goods or services on credit, which results in an increase in liabilities. This increase in liabilities is offset by a corresponding increase in the firm's current assets (inventory or cash). As a result, there is no effect on the equity of the firm, and it is considered an inflow of cash because the firm has more cash available to use for other purposes.

The Effect of an Increase in a Firm's Accounts Payable