For Each of the Following Operating Activities, Select Whether It

question 125

Multiple Choice

For each of the following operating activities, select whether it is a source of cash, a use of cash or neither under the indirect method.
-increase in Inventory

• A)source
• B)use
• C)neither

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Definitions:

Production Budget

An estimate of the number of units that must be produced in a given period to meet the sales and inventory needs, forming part of the master budget of a business.

Finished Goods Inventory

Products that have completed the manufacturing process but have not yet been sold or distributed to customers.

Expected Units Sold

The number of units of a product that a company anticipates selling in a particular period based on market research and sales forecasts.

Direct Materials Budget

An estimation of the quantity and cost of direct materials necessary for production, matching the production budget.