Asked by Travis Williams on May 11, 2024
Verified
Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, a decrease in inventory would be added to net income.
Indirect Method
A method used in the Statement of Cash Flows to convert net income into net cash flow from operating activities by adjusting for non-cash transactions and changes in working capital.
Net Cash
The remaining amount of cash after all cash expenses have been paid, reflecting a company's true liquidity position.
Decrease in Inventory
A reduction in the quantity or value of inventory, which can indicate higher sales or issues in supply chain and production.
- Pinpoint the changes made to net income within the indirect method for determining net cash flows from operating activities.
- Identify how fluctuations in current assets and liabilities affect cash flow operations.
Verified Answer
Learning Objectives
- Pinpoint the changes made to net income within the indirect method for determining net cash flows from operating activities.
- Identify how fluctuations in current assets and liabilities affect cash flow operations.
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