How Do Intra-Entity Sales of Inventory Affect the Preparation of a Consolidated

Multiple Choice

How do intra-entity sales of inventory affect the preparation of a consolidated statement of cash flows?

A) They must be added in calculating cash flows from investing activities.
B) They must be deducted in calculating cash flows from investing activities.
C) They must be added in calculating cash flows from operating activities.
D) Because the consolidated balance sheet and income statement are used in preparing the consolidated statement of cash flows, no special elimination is required.
E) They must be deducted in calculating cash flows from operating activities.