The Change in a Firm's Cash Position Between Successive Balance

question 49

Multiple Choice

The change in a firm's cash position between successive balance sheet dates will not equal the reported income for that period for all of the following reasons except:

• A)Reported net income usually will not equal cash flow from operating activities because noncash revenues and expenses are often recognized as part of accrual income.
• B)Reported net income usually will not equal cash flow from operating activities because certain operating cash inflows and outflows are not recorded as revenues or expenses under accrual accounting in the same period the cash flows occur.
• C)Changes in cash are also caused by nonoperating investing activities like the purchase of treasury stock.
• D)Additional changes in cash are caused by financing activities like the repayment of a bank loan.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overheads incurred to convert raw materials into finished products.

Blending Department

A specialized sector within a manufacturing operation where various inputs are combined to produce a homogeneous product.

Weighted-Average Method

An inventory costing method that averages the costs of goods available for sale to determine the cost of goods sold and ending inventory.

Conversion Costs

The costs incurred to convert raw materials into finished goods, typically including labor and overhead expenses.