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A Company Uses the Direct Method to Prepare the Statement

Question 86

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A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements:
A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements: *Relates solely to the acquisition of inventory Which of the following is correct about inventory in the operating activities category of the cash flow statement? A) The decrease of $20,000 will be subtracted from net income. B) The decrease of $20,000 will be added to net income. C) The decrease of $20,000 will be subtracted from cost of goods sold to determine payments to suppliers. D) The decrease of $20,000 will be added to cost of goods sold to determine payments to suppliers.
*Relates solely to the acquisition of inventory
Which of the following is correct about inventory in the operating activities category of the cash flow statement?


A) The decrease of $20,000 will be subtracted from net income.
B) The decrease of $20,000 will be added to net income.
C) The decrease of $20,000 will be subtracted from cost of goods sold to determine payments to suppliers.
D) The decrease of $20,000 will be added to cost of goods sold to determine payments to suppliers.

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