The Reporting of Net Cash Provided or Used by Operating

question 105

Multiple Choice

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the:

• A) Direct method of reporting net cash provided or used by operating activities.
• B) Cash basis of accounting.
• C) Classified statement of cash flows.
• D) Indirect method of reporting net cash provided or used by operating activities.
• E) Net method of reporting cash flows from operating activities.

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Definitions:

Machine-Hours

A measure of the amount of time that a machine is operated, used as a basis for allocating manufacturing overhead.

Variable Manufacturing Overhead

The portion of overhead costs that varies with production volume, including utilities and indirect labor expenses related to manufacturing.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production output, such as salaries of managers and depreciation of factory equipment.

Machine-Hours

A metric for the amount of time a machine is operational, typically used in manufacturing processes.