Bowden Company paid cash to purchase two identical inventory items. The first purchase cost $16.00 cash and the second cost $18.00 cash. Bowden sold one inventory item for $28.00 cash. Based on this information alone, without considering the effect of income tax,:

Question

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The cash flow from operating activities is determined by the actual cash transactions, which include the cash outflow for purchasing inventory and the cash inflow from sales. The cost flow assumption (FIFO, LIFO, or weighted average) affects the cost of goods sold and inventory valuation, but not the cash flow itself.

Bowden Company Paid Cash to Purchase Two Identical Inventory Items