Asked by Aleya Smith on Jun 14, 2024
Verified
In most companies, the bulk of accounts payable arises from:
A) buying inventory on credit.
B) selling inventory on credit.
C) buying airline tickets for traveling employees on credit.
D) customers paying off old bills.
Accounts Payable
Money owed by a company to its creditors for goods and services purchased on credit.
Buying Inventory
The process of purchasing goods or materials that a company plans to sell to its customers, which is a critical component of managing supply and demand.
- Comprehend the primary sources of accounts payable in most companies.
Verified Answer
SK
sylvie kengneJun 14, 2024
Final Answer :
A
Explanation :
Buying inventory on credit is a common practice in many companies and often results in a significant portion of their accounts payable. This is because companies will frequently purchase large quantities of inventory from suppliers on credit to maintain adequate levels of inventory and avoid stockouts. Selling inventory on credit may result in accounts receivable for the company, rather than accounts payable. Buying airline tickets is also unlikely to account for a substantial portion of a company's accounts payable. Finally, customers paying off old bills would impact the accounts receivable of the company, not the accounts payable.
Learning Objectives
- Comprehend the primary sources of accounts payable in most companies.
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