Assume cash paid to suppliers for 2011 is $420,000; that merchandise inventory increased by $20,000 during the year, and that cost of goods sold was $415,000 for 2011. During 2011, accounts payable must have:

Question

Quizplus · Accepted Answer

Accounts payable represent amounts owed to suppliers for purchases of goods or services that have not yet been paid. The formula to calculate change in accounts payable is: 
Accounts Payable (end of year) - Accounts Payable (beginning of year) = Cash Paid to Suppliers - Increase in Inventory - Cost of Goods Sold
Substituting the given values: 
Accounts Payable - 0 = $420,000 - $20,000 - $415,000 
Accounts Payable = $15,000 increase
Therefore, choice C, increased by $15,000 is the correct answer.

Assume Cash Paid to Suppliers for 2011 Is $420,000; That