Asked by Darian Appelt on May 07, 2024
Verified
A decrease to Merchandise Inventory results in what condition?
A) A negative cash effect
B) A positive cash effect
C) No cash effect
D) None of the above are correct.
Merchandise Inventory
Products that a retailer, wholesaler, or distributor has on hand to sell to customers.
Cash Effect
The impact of any transaction on a company's cash and cash equivalents, indicating how the transaction alters the company's liquidity.
- Understand the impact of transactions on cash flow.
- Identify positive and negative cash flow effects from changes in balance sheet items.
Verified Answer
AN
Angela NavalesMay 13, 2024
Final Answer :
B
Explanation :
A decrease in Merchandise Inventory typically indicates that a company has sold inventory, which results in cash coming into the business, thus having a positive cash effect.
Learning Objectives
- Understand the impact of transactions on cash flow.
- Identify positive and negative cash flow effects from changes in balance sheet items.
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