An Increase in the Inventory Account of a Company from $10,000

question 78

Multiple Choice

An increase in the Inventory account of a company from $10,000 at the beginning of the year to $15,000 at the end of the year would be shown on the company's statement of cash flows prepared under the indirect method as:

• A)an addition to net income of $5,000 in order to arrive at net cash provided by operating activities.
• B)a deduction from net income of $5,000 in order to arrive at net cash provided by operating activities.
• C)an addition to net income of $15,000 in order to arrive at net cash provided by operating activities.
• D)a deduction from net income of $10,000 in order to arrive at net cash provided by operating activities.

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Definitions:

House Un-American Activities Committee

A committee of the U.S. House of Representatives, established in 1938, which conducted investigations into alleged disloyalty and subversive activities by persons or organizations suspected of having Communist ties.

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The 37th President of the United States, serving from 1969 to 1974, known for his involvement in the Watergate scandal leading to his resignation.

Alger Hiss

A former State Department official who was convicted of perjury in the late 1940s, stemming from allegations of spying for the Soviet Union, leading to a highly publicized trial and contributing to the Red Scare.

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Organizations in the Southern United States during the mid-20th century that promoted racial segregation and opposed civil rights for African Americans using economic pressures and social intimidation.