How does an increase in inventory by $10, paid for with cash, impact the Cash Flow statement?

When inventory increases by $10 and is paid for with cash, this transaction results in a reduction of cash available. In accounting terms, when a business purchases inventory, it typically uses cash or cash equivalents to make this purchase.

In this case, as inventory is an asset being acquired and cash is being spent to increase this asset, it directly impacts the Cash Flow statement by showing a decrease in cash. Specifically, the cash outflow for the purchase of inventory reduces the overall cash balance of the company, which is reflected in the cash flow from operating activities section.

Thus, the correct answer reflects the decrease in cash as a consequence of using cash to purchase inventory, leading to a cash decrease of $10.