So far, we can categorize financial varaibles on the Statement of Cash Flows, and we can find how varaibles change from one year to the next. The last step is to evaluate how these changes impact cash flows. For example, an increase in Notes Payable increases cash flows, while an increase in Inventory actually shows up as a decrease in cash flows. Here is a rule you can follow Asset Accounts work in the Opposite Direction while Liability Accounts work in the Same Direction: An Increase in an Asset Account leads to a Decrease on the Statement of Cash Flows An Decrease in an Asset Account leads to an Increase on the Statement of Cash Flows An Increase in a Liability Account leads to an Increase on the Statement of Cash Flows An Decrease in a Liability Account leads to an Decrease on the Statement of Cash Flows Read Each of the Statements below and identify and select only those that are an Increase on the Statement of Cash Flows An Decrease in Inventory An Increase in Accounts Receivable A Decrease in Long Term Debt An Increase in Accounts Payable