Wesley, Inc The Change in Merchandise Inventory Is Shown as a Negative

question 161

True/False

Wesley, Inc. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet:
$\begin{array}{c}\text { Wesley, Inc.}\\\text { Comparative Balance Sheet}\\\text { December 31,2019and 2018}\\\begin{array}{|l|r|r|r}\hline& 2018 & 2017 & \text { Increase/(Decrease) } \\\hline \text { Cash } & \$ 42,000 & \$ 25,000 & \$ 17,000 \\\hline \text { Accounts Receivable } & 32,000 & 55,000 & (23,000) \\\hline \text { Merchandise Inventory } & 180,000 & \underline{123,000} & 57,000 \\\hline \text { Total Assets } & \$ 254,000 & \$ 203,000 & \$ 51,000\\\hline\end{array}\end{array}$ The change in Merchandise Inventory is shown as a negative cash flow in the adjustments to net income.

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