It is a use of cash, and will be shown in the investing section as a subtraction

Question

It is a use of cash, and will be shown in the investing section as a subtraction.

The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin's inventory goes up: Select: 1 It is a source of cash and will be shown in the operating section as an addition. It is a use of cash, and will be shown in the operating section as a subtraction. It is a source of cash, and will be shown in the investing section as an addition.

It is a use of cash, and will be shown in the investing section as a subtraction.

The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin's inventory goes up Select 1 Save Answer It is a source of cash and will be shown in the operating section as an addition. It is a use of cash, and will be shown in the operating section as a subtraction. It is a source of cash, and will be shown in the investing section as an addition. It is a use of cash, and will be shown in the investing section as a subtraction.

Explanation / Answer

Inventory is an operating asset. When inventory is purchased, cash will decrease and inventory will increase. It is a cash out flow transaction.

Hence, correct option is “It is a use of cash, and will be shown in the operating section as a subtraction”.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.