According to the statement of cash flows, an increase in inventory will ________ the cash flow from ________ activities.
A) increase; operating
B) decrease; financing
C) decrease; operating
D) increase; financing
E) increase; investment

Question

Quizplus · Accepted Answer

An increase in inventory means the company has spent cash to purchase more inventory, which is classified as an operating activity. Therefore, it will decrease the cash flow from operating activities.

According to the Statement of Cash Flows, an Increase in Inventory