A Decrease in the Inventory Account During the Year Should

question 39

Multiple Choice

A decrease in the inventory account during the year should be reported on the statement of cash flows as:

• A)An increase in cash flows from operating activities
• B)An increase in cash flows from investing activities
• C)A decrease in cash flows from operating activities
• D)A decrease in cash flows from investing activities
• E)An increase in cash flows from financing activities

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Definitions:

Budget Variance

The difference between budgeted amounts and actual amounts spent or earned, used to assess financial performance against projections.

Volume Variance

A difference between actual and budgeted sales or production volumes, impacting costs and profitability.

Variable Component

Part of a cost or expense that varies with changes in activity level, production volume, or sales.

Fixed Component

The portion of a cost that remains constant regardless of the level of activity or output.