What is implied if the inventory account has increased?
A)Cash flow from financing activities has decreased relative to net income.
B)Cash flow from operating activities has increased relative to net income.
C)Cash flow from operating activities has decreased relative to net income.
D)Cash flow from financing activities has increased relative to net income.

Question

Quizplus · Accepted Answer

An increase in the inventory account typically indicates that the company has purchased more inventory and therefore has less cash available (a decrease in operating cash flow). This does not necessarily have an impact on cash flows from financing activities.

What Is Implied If the Inventory Account Has Increased