Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) In the statement of cash flows, a decrease in accounts receivable is reported as a use of cash.
• 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 reported as a use of cash.
• D) In the statement of cash flows, depreciation charges are reported as a use of cash.
• E) In the statement of cash flows, a decrease in inventories is reported as a use of cash.

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Definitions:

Direct Labor Rate

The cost per hour that a company pays for direct labor, typically related to the production of goods.

Direct Materials Cost

The cost of raw materials directly used in the production of a product, easily identifiable and assignable to the product.

Activity-Based Costing System

A costing method that assigns costs to products or services based on the resources they consume and the activities they require.

Activity Cost Pools

A grouping of all the costs related to performing a specific activity, used in activity-based costing to allocate costs more precisely.