According to the Statement of Cash flOws, an Increase in Inventory

question 352

Multiple Choice

According to the statement of cash flows, an increase in inventory will _____ the cash flow from _____ activities.

• A) Decrease; financing.
• B) Decrease; operating
• C) Increase; financing.
• D) Increase; investing.
• E) Increase; operating.

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Definitions:

Predetermined Level

A set benchmark or standard established in advance to guide production activities or cost estimations.

Cost Variance

The difference between the expected (budgeted) cost of an activity and its actual cost.

Standard Cost

A predetermined cost serving as a benchmark for evaluating the actual cost performance of activities.

Actual Cost

The actual expenses incurred in producing a product or delivering a service, including all direct labor, materials, and overhead costs.