When Preparing the Operating Activities Section of the Statement of Cash

question 237

True/False

When preparing the operating activities section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.

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Definitions:

Labor Rate Variance

The difference between the actual labor cost incurred and the standard labor cost for the actual hours worked.

Hourly Rates

The amount charged or paid for each hour of labor or service.

Labor Efficiency Variance

The difference between the expected amount of labor hours to complete a task and the actual hours used, indicating efficiency in labor use.

Standard Labor Rate

A predetermined rate used to allocate labor costs to products or services, based on the expected or average wage rate for labor.