The Effect of an Increase in a Firm's Accounts Payable

question 104

Multiple Choice

The effect of an increase in a firm's accounts payable during the year,assuming that the current asset portion of the balance sheet remains the same,is

• A) an outflow of cash.
• B) an inflow of cash.
• C) neither an inflow nor an outflow of cash.
• D) a decrease in the equity of the firm.

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Definitions:

Residual Value

The anticipated final value of an asset after its period of utility has ended.

Sum-Of-The-Years'-Digits

A depreciation method that accelerates the expense recognition, based on a descending fraction of the sum of the year digits.

Depreciation Expense

Apportioning the expenditure of a substantial asset over its operational life.

Residual Value

The estimated value that an asset will be worth at the end of its useful life, often considered in leasing or depreciation calculations.