Question: Consider preparing the Statement of Cash Flows using the Direct method. When determining the net cash for merchandise (inventories), start with Cost of Goods Sold

  1. Consider preparing the Statement of Cash Flows using the Direct method. When determining the net cash for merchandise (inventories), start with Cost of Goods Sold and do which of the following adjustments?

subtract an increase in inventory and subtract a decrease in Accounts Payable

add an increase in Inventory and add a decrease in Accounts Payable

add an increase in Inventory and subtract a decrease in Accounts Payable

subtract an increase in inventory and add a decrease in Accounts Payable

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