The Investing Cash Flows Section Is Based on an Analysis

question 252

True/False

The investing cash flows section is based on an analysis of the balance sheet accounts for non-current assets and non-current liabilities.

Assess special order decisions, including profitability and impact on normal operations.

Evaluate make or buy decisions based on cost analysis and other relevant factors.

Analyze additional business considerations based on variable and fixed costs.

Understand relevant and irrelevant costs for decision making.

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Definitions:

Fixed Overhead

Refers to the indirect costs of production that do not change with the volume of output, such as rent, salaries, and insurance.

Opening Inventory

The quantity and value of stock available at the start of an accounting period.

Absorption Costing

A method of accounting that encompasses the total manufacturing expenses – encompassing direct materials, direct labor, as well as both variable and fixed overhead costs – within the product's cost.

Variable Costing

An accounting method that only considers variable costs in product pricing and decision making.