Dallas Company Uses the Indirect Method of Preparing the Statement

question 121

Essay

Dallas Company uses the indirect method of preparing the statement of cash flows and has the following current liabilities at the beginning of the period: Accounts Payable,$35,000;Taxes Payable,$15,000.At the end of the period,the balances of the account are as follows: Accounts Payable,$25,000;Taxes Payable,$20,000.What amounts will appear in the cash flow statement? In what category of the statement will they appear?

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Definitions:

Fixed Costs

Costs that do not change with the level of goods or services produced within a certain range; such costs are incurred regardless of business activity levels.

Break-even Point

The point at which total income matches total costs, leading to a situation where there is no gain or deficit.

Variable Cost

Costs that vary directly with the level of production or the volume of services rendered, such as raw materials and direct labor.

Fixed Costs

Costs that remain constant regardless of the amount of products or services a company generates, including expenses like lease payments, wages, and premiums.