Under the Indirect Method of Preparing the Statement of Cash

question 53

Multiple Choice

Under the indirect method of preparing the statement of cash flows, an increase in inventories is deducted from net income to calculate cash provided or used by operating activities because

• A)cash payments to customers were less than the inventory purchases made during the period.
• B)cash paid to acquire inventory was greater than cost of goods sold by the amount that inventories increased.
• C)cash payments to customers were larger than the inventory purchases made during the period.
• D)inventory purchases were less than the cost of goods sold by the amount that inventories increased.

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