Companies Sometimes Make Investments That Do NOT Require Cash

question 43

True/False

Companies sometimes make investments that do NOT require cash. Such transactions are called noncash investing activities and appear in a separate section of the cash flow statement.

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Definitions:

Raw Materials Quantity Variance

The difference between the actual quantity of raw materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit of raw material.

Raw Materials Price Variance

The difference between the actual cost of raw materials purchased and the standard or expected cost, reflecting variances in purchase prices.

Raw Materials Quantity Variance

The difference between the expected and actual quantity of raw materials used in production, affecting manufacturing costs.

Materials Price Variance

This is the difference between the actual cost of direct materials and the standard cost, multiplied by the quantity purchased.