When Preparing a Statement of Cash Flows (Indirect Method), an Increase

Multiple Choice

When preparing a statement of cash flows (indirect method) , an increase in ending inventory over beginning inventory will result in an adjustment to reported net earnings because

A) cash was increased while cost of goods sold was decreased.
B) cost of goods sold on an accrual basis is lower than on a cash basis.
C) acquisition of inventory is an investment activity.
D) inventory purchased during the period was less than inventory sold resulting in a net cash increase.