Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, a decrease in inventory would be added to net income.

Question

Quizplus · Accepted Answer

This is because a decrease in inventory would mean that less money was spent on purchasing inventory during the period, resulting in an increase in cash flow from operating activities. Therefore, it needs to be added to net income to compute the net cash provided by operating activities.

Under the Indirect Method of Determining the Net Cash Provided