On a statement of cash flows prepared using the direct method,if inventory has decreased from one accounting period to another,net purchases will be greater than the cost of goods sold because net purchases during the period have exceeded the dollar amount of the items sold during the period.

Question

Quizplus · Accepted Answer

If inventory has decreased, it means that fewer items were purchased than were sold during the period. As a result, net purchases will be less than the cost of goods sold, not greater.

On a Statement of Cash Flows Prepared Using the Direct