Utah Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: how will the change in Merchandise Inventory be shown on the statement of cash flows?

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Utah Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet:

Utah Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet:

Utah Corp

Comparative Balance Sheet

December 31, 2018 and 2017

2018

2017

Increase/(Decrease)

Cash

$45,000

$27,000

$18,000

Accounts Receivable

48,000

45,000

3,000

Merchandise Inventory

180,000

132,000

48,000

Total Assets

$273,000

$204,000

$69,000

How will the change in Merchandise Inventory be shown on the statement of cash flows?

addition to net income under the operating activities section

subtraction from net income under the operating activities section

negative cash flow under the investing activities section

positive cash flow under the financing activities section

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