Pace Associates, a small consulting firm, charges all of its expenses on Accounts Payable. Pace's Accounts Payable balance was $1,500 at the beginning of the year. During the year, expenses were incurred on account in the amount of $13,500. The ending Accounts Payable balance was $3,500. What is the amount of cash paid for expenses during the year?
A)$17,000
B)$11,500
C)$10,500
D)$15,500

Question

Quizplus · Accepted Answer

The cash paid by the company for expenses is obtained by finding the increase in the Accounts Payable balance from the beginning of the year to the end of the year, and then subtracting this increase from the total expenses incurred on account during the year.

Increase in Accounts Payable = Ending balance - Beginning balance
Increase in Accounts Payable = $3,500 - $1,500
Increase in Accounts Payable = $2,000

CashPaid = Total expenses - Increase in Accounts Payable
CashPaid = $13,500 - $2,000
CashPaid = $11,500

Therefore, the amount of cash paid for expenses during the year was $11,500, which is option B.

Pace Associates, a Small Consulting Firm, Charges All of Its