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

Question

Quizplus · Accepted Answer

An increase or decrease in inventory is considered an operating activity because it represents the purchase or sale of goods in the normal course of business. This affects the cash flow from operations section of the statement of cash flows.

On a Statement of Cash Flows, an Increase or Decrease