Which of the Following Statements Is CORRECT

question 134

Multiple Choice

Which of the following statements is CORRECT?

• A) In the statement of cash flows,a decrease in accounts receivable is subtracted from net income in the operating activities section.
• B) Dividends do not show up in the statement of cash flows because dividends are considered to be a financing activity,not an operating activity.
• C) In the statement of cash flows,a decrease in accounts payable is subtracted from net income in the operating activities section.
• D) In the statement of cash flows,depreciation is subtracted from net income in the operating activities section.
• E) In the statement of cash flows,a decrease in inventories is subtracted from net income in the operating activities section.

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Definitions:

Flexible Budget Graph

A visual representation that shows the difference between actual and expected performance at various levels of activity.

Direct Labor Hours

The cumulative hours that employees, who are engaged directly in creating products or delivering services, spend on work.

Variable Costs

Expenses that vary proportionally with the level of production or sales volume, such as raw materials and direct labor.

Responsibility Accounting

An accounting system that collects, summarizes, and reports financial information related to the responsibilities of individual managers.