During the year a business paid its suppliers £310,000. Trade payables were £40,000 at the start of the year and £52,000 at the end. What were purchases on credit for the year?
Answer and explanation
Correct answer: D. £322,000
- Step 1: Payables account: opening balance + purchases - payments = closing balance.
- Step 2: Purchases = closing £52,000 + payments £310,000 - opening £40,000 = £322,000.
Answer
£322,000.
Why not the others: £298,000 reverses the movement in payables. £310,000 is the cash paid and ignores the change in payables. £402,000 adds both balances instead of finding the difference.
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