Asked by Daniel Bathaei on Jun 13, 2024
Verified
According to the statement of cash flows, an increase in inventory will _____ the cash flow from _____ activities.
A) Decrease; financing.
B) Decrease; operating
C) Increase; financing.
D) Increase; investing.
E) Increase; operating.
Statement Of Cash Flows
A financial document showing how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.
Inventory
The complete list of items such as goods, materials, and products that a business holds for the ultimate goal of resale or repair.
Operating Activities
Activities that relate to the primary operations of a company, such as sales and production, and their effects on cash flow.
- Comprehend how variations in accounts receivable, inventory, and fixed assets influence cash flow, and the representation of these changes in the cash flow statement.
Verified Answer
BB
Blake BasconeJun 18, 2024
Final Answer :
B
Explanation :
An increase in inventory represents an outflow of cash to purchase the inventory, which decreases cash flow from operating activities, as it is part of the company's day-to-day business operations.
Learning Objectives
- Comprehend how variations in accounts receivable, inventory, and fixed assets influence cash flow, and the representation of these changes in the cash flow statement.