An increase in inventory of $7,000 for the year
A)decreases cash flow from operating activities by $7,000.
B)increases cash from operating activities by $7,000.
C)decreases cash flow from operating activities by $14,000.
D)increases cash flow from operating activities by $14,000.

Question

Quizplus · Accepted Answer

An increase in inventory means that more cash was tied up in inventory instead of being available for operating activities. As a result, cash flow from operating activities decreases by the amount of the increase in inventory, which in this case is $7,000.

An Increase in Inventory of $7,000 for the Year