If the December 31,2017,balance of accounts payable is higher than the January 1,2017,balance,then the amount of cash payments will exceed the purchases on account for the year.

Question

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An increase in accounts payable from the beginning to the end of the year indicates that the company has more unpaid bills at the end of the year than at the beginning. This does not necessarily mean cash payments exceeded purchases on account; it could indicate that purchases on account were greater than cash payments made towards those purchases.

If the December 31,2017,balance of Accounts Payable Is Higher Than