Assume That the Balance of Accounts Payable Does Not Change

question 13

Multiple Choice

Assume that the balance of accounts payable does not change during a period.When preparing a statement of cash flows,an increase in ending inventory over beginning inventory will result in an adjustment to net income under the indirect approach because

• A)the amount of cost of goods sold is equal to the amount of cash paid for purchases.
• B)consumed inventory is an expense but not a use of funds.
• C)the amount of cost of goods sold on an accrual basis is less than the amount of cash paid for purchases of inventory.
• D)the amount of cash paid for purchases of inventory is less than the amount of cost of goods sold on an accrual basis.

---

Definitions:

Supply And Demand

Economic model describing the interaction between the availability of a product (supply) and the desire for that product (demand).

Static Time-Series Method

A forecasting technique that assumes past data patterns will continue into the future without adjusting for dynamic changes.

Historical Data

Past information and data used to analyze trends, forecast future events, and make informed decisions.

Highly Variable

Characterized by large changes or fluctuations, often unpredictably.