When Constructing a Statement of Cash Flows, Which of the Following

question 6

Multiple Choice

When constructing a Statement of Cash Flows, which of the following actions would be considered a source of funds?

• A)increase in the cash account
• B)decrease in accounts payable
• C)increase in inventory
• D)increase in long-term bonds
• E)increase in fixed assets

---

Definitions:

Contribution Margin

The gap between sales income and variable expenses, showing the extent to which income aids in addressing fixed costs and creating profit.

Selling Price

The amount of money charged for a product or service, or the sum a customer is willing to pay.

Fixed Manufacturing Cost

Expenses that do not change with the volume of production, such as rent, salaries, and insurance costs related to manufacturing facilities.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors hold true.