A decrease in the inventory account during the year should be reported on the indirect method statement of cash flows as:
A) An increase in cash flows from financing activities
B) A decrease in cash flows from operating activities
C) An increase in cash flows from operating activities
D) An increase in cash flows from investing activities
E) A decrease in cash flows from investing activities

Question

Quizplus · Accepted Answer

A decrease in inventory represents an increase in cash flows from operating activities as it indicates that less cash was tied up in inventory during the year.

A Decrease in the Inventory Account During the Year Should