Using the Indirect Method of Preparing the Statement of Cash

question 135

Multiple Choice

Using the indirect method of preparing the statement of cash flows,which of the following would be added to net income?

• A)depletion expense
• B)an increase in accounts receivable
• C)a decrease in accounts payable
• D)gain on the sale of property

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Definitions:

Job-Order Costing System

A cost accounting system that assigns manufacturing costs to each product, allowing detailed tracking of expenditures.

Direct Labor-Hours

The total hours of labor work directly on manufacturing a product or providing a service, often used in costing and pricing decisions.

Milling Department

A section within a manufacturing facility where the process of grinding, cutting, pressing, or crushing materials occurs.

Overhead Applied

The portion of manufacturing overhead costs allocated to each unit of production based on a predetermined rate or method.