Under the indirect method,an increase in inventory is added to net income and a decrease in inventory is subtracted from net income to arrive at net cash flows from operating activities.We would subtract an increase in inventory and add a decrease in inventory to net income to arrive at net cash flows from operating activities under the indirect method.

Question

Quizplus · Accepted Answer

The statement is reversed. Under the indirect method, we would add an increase in inventory and subtract a decrease in inventory from net income to arrive at net cash flows from operating activities.

Under the Indirect Method,an Increase in Inventory Is Added to Net