During the Current Year, the Accounts Payable Balance Decreased

question 113

Multiple Choice

During the current year, the accounts payable balance decreased.

• A)This decrease indicates that payments on account were less during the period than credit purchases.
• B)This decrease is added to net income in the operating activities section of a statement of cash flows prepared under the direct method.
• C)This decrease is deducted from net income in the operating activities section of a statement of cash flows prepared under the direct method.
• D)This decrease indicates that payments on account exceeded credit purchases during the period.

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Definitions:

Markup On Total Cost

A pricing strategy where a fixed percentage is added to the total cost of a product to determine its selling price.

Variable Product Cost

Costs that vary directly with the volume of production, such as raw materials and direct labor costs.

Operating Income

The profitability from a company's core business operations, excluding deductions of interest and taxes.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.