A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its December 31, 2009 financial statements.
*Relates solely to the acquisition of inventory
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What will appear in the operating activities section related to inventory?

Question

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its December 31, 2009 financial statements.
 *Relates solely to the acquisition of inventory
-
What will appear in the operating activities section related to inventory?

Quizplus · Accepted Answer

The decrease in inventory means that the company has sold more inventory than it has purchased. This will result in a decrease in the cost of goods sold, which will increase net income.

A Company Uses the Direct Method to Prepare the Statement