Question

If accounts payable have increased during a period________-

Answer 1

Answer:

d.expenses on an accrual basis are greater than expenses on a cash basis.

Explanation:

Expenses are incurred on two basis namely;Cash basis and Accrual basis. When an expense is incurred and cash is paid, the entries posted are

Debit Expense (p/l)

Credit Cash account

When purchased and payment is yet to be made

Debit Expense (p/l)

Credit Accounts payable

when payment is made,

Debit Account payable

Credit Cash account

This results in a reduction in the accounts payable balance. As such, an increase in account payable is an increase in expense made on accrual basis.

The right option is d.expenses on an accrual basis are greater than expenses on a cash basis.