When Preparing the Operating Activities Section of the Statement of Cash

question 165

True/False

When preparing the operating activities section of the statement of cash flows under the direct method, an increase in accounts receivable is subtracted from sales.

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Definitions:

Direct Labor Hours

Total count of hours devoted by employees in the direct creation of goods or offering of services.

Special Order

A special order involves a one-time or exceptional purchase of goods or services made to customer specifications that may differ from standard offerings.

Variable Costs

Outlays that adjust in response to the volume of production or sales figures.

Fixed Manufacturing Overhead

Represents the production costs that do not change with the level of manufacturing activity, such as salaries of managerial staff and rent of the factory.