Presented Below Is the Operating Activities Section of the Statement

question 59

Multiple Choice

Presented below is the operating activities section of the statement of cash flows for Kerry Corporation for 2012: Which method of preparing the operating activities section has Kerry used?

• A) The direct method
• B) The indirect method
• C) Either method
• D) Cannot be determined without further information

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Definitions:

Underapplied

A term often used in cost accounting to denote when the allocated overhead or indirect costs are less than the actual overhead incurred.

Raw Materials

Basic materials used in the production process that are transformed into finished goods.

Storeroom

A room or space where supplies, materials, or equipment are kept for future use.

Credit

An accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is positioned on the right side of an accounting ledger.