A company's inventory account decreased by $1,000 during the year.Which of the following would appear on the statement of cash flows prepared using the indirect method?

Question

Quizplus · Accepted Answer

The decrease in inventory means that less cash was used to purchase inventory during the year, resulting in a positive effect on cash flow from operations. Therefore, the $1,000 decrease in the company's inventory account would be added back as a positive adjustment under operating activities on the statement of cash flows prepared using the indirect method. Neither investing activities nor deductions would be relevant to this particular scenario.

A Company's Inventory Account Decreased by $1,000 During the Year