Excerpts from Raimo Corporation\'s comparative balance sheet appear below: Which

Question

Excerpts from Raimo Corporation's comparative balance sheet appear below: Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method? The change in Inventory is added to net income; The change in Accounts Payable is added to net income The change in Inventory is added to net income; The change in Accounts Payable is subtracted from net income The change in Inventory is subtracted from net income; The change in Accounts Payable is added to net income The change in Inventory is subtracted from net income; The change in Accounts Payable is subtracted from net income

Explanation / Answer

I believe there is some problem with the question you have given. The word change can be increase or decrease. An increase in inventory is subtracted from net income. An increase in acc payable is added to net income. So if i would want to choose, i will choose: The change in Accounts Payable is added to net income The change in Inventory is subtracted from net income; (they move in opposite direction) Hope this helps!

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