Is Inventory a Operating Activity

Inventories, tax assets, accounts receivable, and accrued revenue are common items of assets for which a change in value will be reflected in cash flow from operating activities.

Is buying inventory an operating activity?

Cash flows from operating activities arise from the activities a business uses to produce net income. For example, operating cash flows include cash sources from sales and cash used to purchase inventory and to pay for operating expenses such as salaries and utilities.

Is inventory increase an operating activity?

The change in the inventory is reported as an adjustment to the company’s net income in the cash from operating activities section of the SCF prepared using the indirect method.