What is implied if the inventory account has increased?

A. Cash flow from financing activities has decreased relative to net income.

B. Cash flow from operating activities has increased relative to net income.

C. Cash flow from operating activities has decreased relative to net income.

D. Cash flow from financing activities has increased relative to net income.

Question

Business

Glenn Robles

6 May, 17:16

What is implied if the inventory account has increased?

A. Cash flow from financing activities has decreased relative to net income.

B. Cash flow from operating activities has increased relative to net income.

C. Cash flow from operating activities has decreased relative to net income.

D. Cash flow from financing activities has increased relative to net income.

+1

Answers (1)

Know the Answer?

Amelie Wolf · Answer 1

C. Cash flow from operating activities has decreased relative to net income.

Explanation:

As we know that

Operating activities involves those activities that impact the after-net income working capital. This will subtract the rise in current assets and a reduction in current liabilities, while adding the decline in existing assets and a rise in current liabilities.

It will adjust some adjustments in working capital. In addition, the depreciation expenses are applied to the net profit and the loss on the selling of assets is added, while the gain on the sale of assets is deducted

Hence, the C option is correct