I
investaguy
Hello,
I'm a techie, not an accounting guy. However, I'm studying accounting and finance on the side for investing purposes and growth. I'm currently reading a very basic book dealing with financial statements. My question is about inventory. The book states if inventory increases then cash has decreased and if inventory decreases cash has increased.
However, wouldn't this depend on whether you actually paid cash or receivedcash for the inventory?
Here's how I see it. Maybe you purchased the inventory on credit? Maybe you sold the inventory on credit increasing account receivable? I both cases, no cash has actually went into or out of the business.
Thanks in advance for any assistance.
John
I'm a techie, not an accounting guy. However, I'm studying accounting and finance on the side for investing purposes and growth. I'm currently reading a very basic book dealing with financial statements. My question is about inventory. The book states if inventory increases then cash has decreased and if inventory decreases cash has increased.
However, wouldn't this depend on whether you actually paid cash or receivedcash for the inventory?
Here's how I see it. Maybe you purchased the inventory on credit? Maybe you sold the inventory on credit increasing account receivable? I both cases, no cash has actually went into or out of the business.
Thanks in advance for any assistance.
John