Which of the Following Describes the Nature of the Operating

question 50

Multiple Choice

Which of the following describes the nature of the operating activities section of the statement of cash flows prepared using the indirect method?

• A)A reconciliation of cash flows provided/(used) by operating activities and net income
• B)An accrual basis format of the income statement
• C)A cash basis format of the income statement
• D)A reconciliation of the net increase or decrease in cash and cash equivalents

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Definitions:

Standard Direct Materials

The predetermined cost and quantity of raw materials expected to be used in the production process, used for budgeting and performance evaluation.

Fixed Factory Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs, due to variations in production levels.

Variable Factory Overhead Controllable Variance

The difference between the actual variable overhead costs incurred and the expected costs based on the standards set for the production volume.

Total Factory Overhead Cost Variance

The difference between the actual overhead costs incurred and the standard overhead costs assigned to production over a given period.