On a Statement of Cash Flows(indirect Method),an Increase or Decrease

question 119

Multiple Choice

On a statement of cash flows(indirect method) ,an increase or decrease in inventory is considered:

• A)an operating activity.
• B)an investing activity.
• C)a financing activity.
• D)an noncash investing or financing activity.

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Definitions:

Inventory Carrying Costs

Inventory carrying costs include all expenses related to holding and storing unsold goods, such as warehousing, insurance, and spoilage.

Ordering Costs

Expenses associated with placing orders for more inventory, including costs related to order processing, communication, and transportation.

Memory Chips

Electronic components used to store data temporarily or permanently in computers and other devices.

Safety Stock

Safety stock is an additional quantity of an item held in inventory to reduce the risk of stockouts and production halts, serving as a buffer against demand fluctuations or supply delays.