A Decrease in the Inventory Account During the Year Should

question 9

Multiple Choice

A decrease in the inventory account during the year should be reported on the indirect method statement of cash flows as:

• A) An increase in cash flows from financing activities
• B) A decrease in cash flows from operating activities
• C) An increase in cash flows from operating activities
• D) An increase in cash flows from investing activities
• E) A decrease in cash flows from investing activities

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Definitions:

Basic Accounting Equation

An equation representing the relationship between a company's assets, liabilities, and equity (Assets = Liabilities + Equity).

Claims

Claims are demands or requests for payment or compensation for a loss or injury under an insurance policy, contract, or legal right.

Changes in Equity

Changes in equity refer to the adjustments in the value of a company's equity over a specific period due to transactions with owners, issuance or repurchase of shares, profits or losses, and dividends.

Statement of Income

A financial document that shows a company's revenues, expenses, and profits over a specific period, highlighting the company's operating performance.