Conversion Costs Include

question 140

Multiple Choice

Conversion costs include:

• A) direct labor and overhead.
• B) direct materials, direct labor and overhead.
• C) direct materials and overhead.
• D) selling and administrative.

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Definitions:

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed directly.

Administrative Expenses

Costs related to the general administration of a business, such as salaries of office staff, rent, and utilities.

Cash Basis

A method in accounting where revenues and expenses are recorded only when cash is received or paid out, respectively.

Statement of Cash Flows

A financial statement that summarizes a company's cash inflows and outflows over a specific period.