Question 1

During the year, Shoe Productions recorded inventory purchases on credit of $506.7 million. The financial statement effect of these purchase transactions would be to:

Select one:

a. Increase liabilities (Accounts payable) by $506.7 million

b. Decrease cash by $506.7 million

c. Increase expenses (Cost of goods sold) by $506.7 million

d. Decrease noncash assets (Inventory) by $506.7 million

e. None of these are correct