If an Analysis of the Balance Sheet Shows That Accounts

question 60

Short Answer

If an analysis of the balance sheet shows that Accounts Payable increased during the period, then the increase would have to be _______________ to net income to convert net income to cash.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and overhead) in product costs and treats fixed manufacturing overhead as an expense of the period.

Period Cost

Expenses that are not directly tied to production activity and are expensed in the period in which they are incurred.

Variable Costing

A technique in accounting that encompasses only costs that vary with production (including direct materials, direct labor, and variable manufacturing overhead) in the pricing of products.

Period Cost

Expenses that are not directly tied to the production of goods and are instead associated with time periods, such as administrative salaries.