Which Would NOT Be Included in the Operating Activities Section

question 52

Multiple Choice

Which would NOT be included in the operating activities section of a direct method statement of cash flow?

• A) Changes in accounts payable
• B) Changes in accounts receivable
• C) Changes in inventory
• D) Changes in long-term notes payable

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Definitions:

Firm's Assets

Economic resources owned by a firm that are expected to provide future benefits, including physical items like machinery and intangible items like patents.

Work In Process Inventory

The portion of inventory representing goods partially completed, encompassing all direct materials, work in progress labor, and manufacturing overhead costs.

Direct Costs

Costs that can be directly attributed to the production of a product or service, such as materials and labor.

Indirect Costs

Expenses that are not directly attributable to the production of goods or delivery of services but are necessary for the operation of a business, such as utilities or rent.