When Using the Spreadsheet Approach for the Indirect Method to Calculate

question 36

Multiple Choice

When using the spreadsheet approach for the indirect method to calculate cash flows from operating activities,net income would be found as:

• A)a debit to the Retained Earnings account.
• B)the difference between revenues and expenses.
• C)a credit to the Retained Earnings account.
• D)the difference between gains and losses.

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Definitions:

Weighted-Average Method

A method for valuing inventory that determines the cost of goods sold and the final inventory value by computing the average cost of all products available for sale throughout the period.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished goods.

Process Costing

A costing method used in mass production where costs are assigned to processes or departments, not individual units.

Conversion Costs

The total expense required to convert raw materials into finished goods, including labor and overhead costs.