Barker Company purchased two identical inventory items for $18 and $20 in cash. It then sold one item for $30 in cash. The document asks to determine Barker's cash flow from operating activities based on this information alone and without considering taxes. The solution is that the cash flow from operating activities would not be affected by the cost flow method used.

1. Barker Company paid cash to purchase two identical inventory items. The first purchase cost
$18.00 cash and the second cost $20.00 cash. Barker sold one inventory item for $30.00 cash.
Based on this information alone, without considering the effect of income tax,:
A.cash flow from operating activities is $11.00 assuming a weighted average cost flow.
B.cash flow from operating activities is $12.00 assuming a FIFO cost flow.
C.cash flow from operating activities is $10.00 assuming a LIFO cost flow.
D.the amount of cash flow from operating activities is not affected by the cost flow method.
Solution
Without considering the effect of income tax, the amount of cash flow from operating activities
is not affected by the cost flow method.