In Calculating Cash Flows from Operating Activities Using the Indirect

question 211

Multiple Choice

In calculating cash flows from operating activities using the indirect method, a loss on the disposal of equipment will appear as a(n)

• A) subtraction from net income.
• B) addition to net income.
• C) addition to cash flow from investing activities.
• D) subtraction from cash flow from investing activities.

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Definitions:

Overhead Efficiency Variance

The difference between flexible budgets using actual volume and standard volume. It is an estimate of the additional overhead incurred.

Direct Labor Hours

The total amount of time workers spend directly manufacturing a product or providing a service.

Mix Variance

Captures the effect of substitution among the products, holding constant the number of units sold.