Which of the Following Is Not One of the Reasons

question 83

Multiple Choice

Which of the following is not one of the reasons why absorption costing might also be used for internal reporting?

• A) It is more useful for managerial decision making than variable costing
• B) It is cost effective and less confusing for managers to use one common method for both internal and external reporting
• C) It can help prevent managers from making decisions that make their performance look good to the detriment of income reported to shareholders
• D) For long-term decision making both variable and fixed costs must be considered for inventory related decisions

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Definitions:

Statement Of Cash Flows

A financial statement that summarizes the cash inflows and outflows for a company, showing how its cash levels change over time.

Cash Inflows

The total amount of money being transferred into a business, typically from operations, investments, and financing activities.

Cash Outflows

Payments or expenditures made by a business, resulting in a decrease in cash holdings.

Financing Activities

Transactions that involve raising capital, repaying investors, and altering the capital structure of the organization among other financing-related decisions.