Which of the Following Statements Best Describes the Statement of Cash

question 68

Multiple Choice

Which of the following statements best describes the statement of cash flows?

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

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Definitions:

Marginal Cost

The supplementary expenditure brought on by the creation of one more unit of a good or service.

Total Variable Cost

The sum of all variable expenses that are incurred in the direct production of goods or services.

AVC

Average Variable Cost, which is the variable cost per unit of output.

Marginal Cost

The production cost for one more unit of a product.