On a statement of cash flows(indirect method),an increase or decrease in inventory is considered:
A)an operating activity.
B)an investing activity.
C)a financing activity.
D)an noncash investing or financing activity.

Question

Quizplus · Accepted Answer

Changes in inventory are considered an operating activity because they are related to the company's main business operations of buying and selling inventory. An increase in inventory is considered a use of cash and a decrease in inventory is considered a source of cash in the operating activities section of the statement of cash flows.

On a Statement of Cash Flows(indirect Method),an Increase or Decrease