The Following Items Were Reported on the Balance Sheets and Income

question 87

Multiple Choice

The following items were reported on the balance sheets and income statements of Marshall Company: How would the change in accounts payable be reported in the operating activities section of the statement of cash flows under the indirect method?

• A) as an addition to operating expenses
• B) as a deduction from operating expenses
• C) as an addition to net income
• D) as a deduction from net income

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Definitions:

Raw Materials Used

The basic materials and components that are consumed in the manufacturing process to produce finished goods.

Total Cost

Total cost refers to the sum of all expenses incurred in producing a product or providing a service, including both fixed and variable costs.

Finishing Products

The final stages in the production process where goods are completed and made ready for sale.

Cost of Goods Manufactured

The total production cost of goods completed and ready for sale during a specific accounting period.