Use the Equation Presented Below to Answer the Question That

question 178

Multiple Choice

Use the equation presented below to answer the question that follows: $$\begin{array} { l } \text { Cash } = \mathrm { CL } + \mathrm { LTL } + \mathrm { CS } + \mathrm { RE } - \mathrm { NCCA } - \mathrm { LTA } \\\text { where: } \quad \mathrm { CL } = \text { Current liabilities } \\\text { LTL = Long-term liabilities } \\\text { CS } = \text { Common stock } \\\mathrm { RE } = \text { Retained earnings } \\\text { NCCA } = \text { Noncash current assets } \\\text { LTA } = \text { Long-term assets } \\\end{array}$$ ? Which of the following activities results in a cash outflow?

• A) Decreases in noncash current assets (NCCA)
• B) Decreases in long-term assets (LTA)
• C) Increases in long-term liabilities (LTL)
• D) Decreases in retained earnings (RE)

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Definitions:

Blending Department

A production department focused on combining various raw materials or components into a final product in a consistent and homogeneous manner.

Weighted-Average Method

An inventory costing method that averages out all costs of inventory available for sale during the period.

Process Costing System

An accounting method used where similar goods are produced in a continuous process, distributing costs over the units produced, making it easier to ascertain per unit cost.

Weighted-Average Method

A method of inventory costing that assigns a weighted average cost to each item in inventory, used in both perpetual and periodic inventory systems.