Exhibit 12-4 Manning Company Uses the Indirect Method to Prepare the Statement

question 65

Multiple Choice

Exhibit 12-4
Manning Company uses the indirect method to prepare the statement of cash flows.The following amounts are shown in its December 31,2013,financial statements.

-Refer to Exhibit 12-4.How will the change in inventory be reported in the operating activities

• A)The decrease of $105,000 will be subtracted from net income.
• B)The decrease of $105,000 will be subtracted from cost of goods sold.
• C)The decrease of $105,000 will be added to cost of goods sold.
• D)The decrease of $105,000 will be added to net income.
• E)None of the answer choices is correct.