A Company Reported an Increase in Accounts Payable and a Decrease

question 78

Multiple Choice

A company reported an increase in accounts payable and a decrease in inventory during 2010.Which of the following statements is correct?

• A)Cash paid to suppliers equals cost of goods sold plus both the increase in accounts payable and the decrease in inventory.
• B)Cash paid to suppliers equals cost of goods sold minus both the increase in accounts payable and the decrease in inventory.
• C)Cash paid to suppliers equals cost of goods sold minus the increase in accounts payable, plus the decrease in inventory.
• D)Cash paid to suppliers equals cost of goods sold plus the increase in accounts payable, minus the decrease in inventory.

---

Definitions:

Units of Output

A measure of production output, quantifying the total amount of goods or services produced.

Marginal Revenue

The additional revenue that is generated by selling one more unit of a product or service.

Profit-maximizing

A strategy where firms set output and price levels to yield the highest possible profit.

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, homogeneous products, and the freedom of entry and exit, leading to zero economic profit in the long run.