Which of the Following Transactions or Events Should Be Reported

question 50

Multiple Choice

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

• A)Credit sales.
• B)Cash collections from customers.
• C)Depreciation expense.
• D)Cash received from the sale of a building.
• E)Cash received from the sale of treasury stock.

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Definitions:

Raw Materials

Fundamental substances employed in the creation of manufactured products.

Direct Materials

Materials that can be directly linked to the manufacturing of a particular product.

Manufacturing Overhead

Costs in manufacturing beyond direct labor and materials, including expenses like factory maintenance and equipment depreciation, essential for production but not directly traceable to specific units.

Indirect Materials

Materials used in the production process that are not directly traceable to a specific product.