In Creating a Statement of Cash Flows Using the Indirect

question 54

Multiple Choice

In creating a statement of cash flows using the indirect method, which of the following statements is TRUE about depreciation expense?

• A) It is added back as an adjustment to net income in the operating activities section.
• B) It is shown as a negative cash flow in the investing activities section.
• C) It is added back to purchases of plant assets under investing activities.
• D) It is shown as a negative cash flow under operating activities.

Understand the impact of production levels on income under different costing methods.

Calculate and interpret direct labor costs as part of product costing.

Understand the concepts of variable and absorption costing.

Calculate unit product costs under variable and absorption costing methods.

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