A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements:

End of this year End of prior year

Accounts receivable $115,000 $100,000

Cost of goods sold 560,000

Sales revenue 830,000

Accounts payable* 77,000 67,000

Inventory 83,000 106,000

Salary payable 14,000 10,000

Salary expense 49,000 45,000

*Relates solely to the acquisition of inventory

Which of the following is correct about inventory in the operating activities category of the cash flow statement?

A. The decrease of $23,000 will be subtracted from net income.

B.The decrease of$23,000will be added to net income.

C.The decrease of $23,000 will be added to cost of goods sold to determine payments to suppliers.

D.The decrease of $23,000 will be subtracted from cost of goods sold to determine payments to suppliers.