During 2011, the Accounts Receivable Balance of Big Buck Corporation

question 8

Multiple Choice

During 2011, the accounts receivable balance of Big Buck Corporation increased. From Big Buck's statement of cash flows, the financial reader would conclude which of the following?

• A) This increase indicates that Big Buck sold more than it collected in cash during the period.
• B) This increase is added to net income in the operating activities section of a statement of cash flows prepared under the indirect method.
• C) This increase is added to sales recognized on the income statement to determine the cash collections from customers during the period.
• D) This increase indicates that Big Buck purchased more than it sold in cash during the period.

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Definitions:

Long-Run Average Total Cost

The average cost per unit of output when all input factors are variable, and economies of scale are fully exploited.

Production

The process of creating goods and services from various inputs like labor, knowledge, and raw materials.

U-Shape

A graphical representation describing a relationship or phenomenon that decreases, reaches a minimum point, and then increases, resembling the letter "U."

Economies of Scale

Reduction in per unit cost as the volume of production increases, due to factors like bulk purchasing and efficient use of resources.