On the Statement of Cash Flows, How Would a Company

question 64

Multiple Choice

On the statement of cash flows, how would a company report the purchase of machinery?

• A) As cash used in operating activities.
• B) As cash used in financing activities.
• C) As cash used in purchasing activities.
• D) As cash used in investing activities.

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Definitions:

Direct Labor Costs

Expenses associated directly with the manufacturing of a product, including wages of workers actually making the product.

Indirect Labor Costs

Costs associated with employees who do not directly work on the product but are necessary for the manufacturing process.

Work in Process

Inventory consisting of items that are in the process of being manufactured but are not yet complete.

Raw Materials Transactions

Activities and records pertaining to the purchase, usage, and inventory management of raw materials used in the production process.