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

question 103

True/False

Wellesley,Inc.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
$\begin{array}{c} \text { Wellesley, Inc.}\\ \text { Comparative Balance Sheet}\\ \text { December 31,2017 and 2016}\\\begin{array}{|l|c|c|r|}\hline& 2017 & 2016 & \text { Increase/(Decrease) } \\ \hline \text { Cash } & \$ 42,000 & \$ 25,000 &\$17,000\\\hline \text { Accounts Receivable } & 32,000 & 55,000&(23,000) \\\hline \text { Merchandise Inventory } & 180,000 & 123,000&57,000 \\\hline \text { Total Assets } & \$ 254,000 & \$ 203,000 &\$51,000\\\hline\end{array}\end{array}$
The change in Merchandise Inventory is shown as a negative cash flow in the adjustments to net income.

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