On an indirect method statement of cash flows, a decrease in inventory would be:
A) reflected in the investing activities section
B) deducted from net income
C) added to net income
D) netted against any decreases in accounts payable

Question

Quizplus · Accepted Answer

A decrease in inventory is considered a positive adjustment to net income on the indirect method statement of cash flows because it implies that less cash was used to purchase inventory, thereby increasing cash flows from operating activities.

On an Indirect Method Statement of Cash Flows, a Decrease