In a statement of cash flows, a change in the inventories account would be classified as:
A) an operating activity.
B) a financing activity.
C) an investing activity.
D) a noncash item that need not appear on the statement of cash flows.

Question

Quizplus · Accepted Answer

A change in the inventories account is directly related to the company's operating activity, as it reflects the amount of inventory being purchased or sold during the period. Therefore, it should be classified as an operating activity on the statement of cash flows.

In a Statement of Cash Flows, a Change in the Inventories