Statement of Cash Flows - Accounting

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Question

On the statement of cash flows, an increase in inventory would be reported in which of the following sections?

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Answer

There are three primary types of cash flow activities and the statement of cash flows has a section for each activity: operating, investing, and financing. Operating activities are defined as changes in current assets and current liabilities. Investing activities are described as changes in long-term assets. Last, financing activities are changes in long-term liabilities and stockholders' equity; therefore, an increase in inventory would be reported as an operating activity.

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