Inventory increased by $100,000 and wages payable increased by $50,000.What will be the net result in terms of cash flow?
A) Cash increased by $50,000.
B) Cash decreased by $50,000.
C) Cash increased by $150,000.
D) Cash decreased by $150,000.

Question

Quizplus · Accepted Answer

An increase in inventory means that cash was used to purchase more inventory, resulting in a decrease in cash flow. An increase in wages payable means that cash needs to be paid out in the future, resulting in a decrease in cash flow. The net result is a decrease in cash flow of $50,000.

Inventory Increased by $100,000 and Wages Payable Increased by $50,000