Which of These Factors Could Cause Operating Profit to Be

question 51

Multiple Choice

Which of these factors could cause operating profit to be more than cash flow from operations?

• A) an increase in the balance of accounts receivable over the period
• B) an increase in the balance of inventory over the period
• C) an increase in the balance of accounts payable over the period
• D) both A and B

Analyze the effect of varying levels of sales on profit using cost-volume-profit (CVP) analysis.

Use scatter diagrams as a tool for analyzing past cost behaviors and estimating future costs.

Understand and apply the high-low method for estimating fixed and variable costs.

Understand the principles and rules of revenue recognition under Generally Accepted Accounting Principles (GAAP).

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Definitions:

Conversion Cost

The sum of direct labor costs and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.

Equivalent Unit

A concept used in cost accounting to represent a partially finished unit in terms of a full finished unit.

Process Costing

A costing method used in manufacturing where costs are assigned to batches or process levels, suitable for homogeneous products.

Service Provider

A company or individual that offers specific professional services or products to customers or businesses.