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A Transaction That Does Not Cause an Inflow or Outflow

question 10

True/False

A transaction that does not cause an inflow or outflow of cash should be reported on the statement of cash flows only if it is an adjustment to convert accrual profit to the cash basis.


Definitions:

Unit Contribution Margin

The profit per unit sold, calculated by subtracting the variable cost per unit from the selling price per unit.

Break-Even Point

The level of production or sales at which total costs equal total revenue, meaning the business neither earns nor loses money.

Contribution Margin Percentage

The ratio of contribution margin (sales revenue minus variable costs) to total sales revenue, expressed as a percentage.

Variable Cost Per Unit

The cost that varies with the level of output or sales, calculated on a per-unit basis.

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