Which Is Not Reported as an Operating Activity on a Cash

question 130

Multiple Choice

Which is not reported as an operating activity on a cash flow statement prepared using the indirect method?

• A)Decreases in inventories
• B)Proceeds from the sales of investments
• C)Interest expense
• D)Increases in Accounts Payable

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Definitions:

Direct Labor

The wages or salaries paid to workers directly involved in the production of goods or services.

Indirect Material Cost

Costs of materials that are part of the production process but are not directly traceable to a finished product.

Lubricants

Substances applied to reduce friction between surfaces in mutual contact, which ultimately decreases the heat generated when the surfaces move.

Period Cost

Expenses incurred by a business that are not directly tied to production activities, such as administrative and selling expenses.