Assume That the Direct Method Is Used to Prepare the Operating

question 200

Multiple Choice

Assume that the direct method is used to prepare the operating activities section of the statement of cash flows.When Accrued Liabilities increase,it means that the company:

• A)paid more cash than it recorded as operating expenses.
• B)paid less cash than it recorded as operating expenses.
• C)prepaid the operating expenses before they were incurred or recorded.
• D)paid for the operating expenses as they were recorded.

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Definitions:

Unit Product Cost

The total cost (both fixed and variable) associated with producing a single unit of a product.

Unit Product Cost

The total cost involved in manufacturing or producing one unit of a product, including materials, labor, and overhead.

CM Ratio

Stands for Contribution Margin Ratio; it is a financial metric that measures the proportion of revenue that exceeds variable costs and contributes to covering fixed costs and generating profit.

Segmented Income Statement

An income statement that presents revenues, expenses, and profits for different segments of a business, offering detailed financial analysis.