Question

Using the ball ce sheet data below, which of the following statements is TRUE about 2017 cash payments to suppliers? Assets Cash Accounts Receivable Inventory Prepaid Expenses Total Current Assets Net Fixed Assets Total Assets 2017 2016 $ 1,038,600 S 1.246,200 S 835,000 $ 501,100 $ 3,676,900 $ 2,976,300 S 75,900 $ 105,400 '$ 5,626,400'S 4,829,000 $ 1,964,500 $ 1,785,600 $ 7,590,900 $ 6,614,600 Liabilities & Equity Accounts Payable Operating Accruals Notes Payable (ST) Total Current Liabilities Long-Term Debt Total Liabilities Total Stockholders' Equity Total Liabilities & Equity 2017 2016 S 759,100 $ 864,200 S 531,300 $ 700,900 S 732,800 S 567.400 2,043,200 $ 2,132,500 $ 1,761,000 $ 1,118,500 $ 3,804,200 $ 3,251,000 $ 3,786,700 $ 3,363,600 $ 7,590,900 $ 6,614,600 The cash paid to suppliers was more than what was reported in CGS on the income statement. The firm accumulated additional inventory during the year, none of which was financed by suppliers. The cash paid to suppliers was less than what was reported in CGS on the income statement. The firm accumulated additional inventory during the year, all of which was financed by suppliers.

Answer 1

	Inventory	Accounts payable
2017	3,676,900	759,100
2016	2,976,300	864,200
Increase (Decrease)	700,600	(105,100)

Option (A) The cash paid to suppliers was more than what was reported in CGS on the income statement. The firm accumulated additional inventory during the year, none of which was financed by suppliers.

The above statement is TRUE because it can be seen that Accounts payable during the year has been decreased by $105,200, which means Accounts payable related to the purchases of the previous year has also been paid. The income statement of any year states the expenses of purchases related to that year only. Therefore, it can be said the payments made to Accounts payable is more than what was reported in CGS on the income statement.