An increase in inventory is reported in a statement of cash flows using the indirect method as a(n)

Question

Quizplus · Accepted Answer

An increase in inventory is deducted from net income in arriving at net cash flows from operating activities in the indirect method. This is because an increase in inventory means that cash has been used to purchase more goods for sale or for production, and therefore represents a reduction in cash available for operating activities.

An Increase in Inventory Is Reported in a Statement of Cash