A Company Uses the Direct Method to Prepare the Statement

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
What will appear in the operating activities section related to inventory?

A) The decrease of $15,000 will be subtracted from net income.
B) The decrease of $15,000 will be added to net income.
C) The decrease of $15,000 will be subtracted from cost of goods sold to determine payments to suppliers.
D) The decrease of $15,000 will be added to cost of goods sold to determine payments to suppliers.

Correct Answer:

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