Which of the Following Would Appear in Both the Operating

question 11

Multiple Choice

Which of the following would appear in both the operating activities section of the direct method format and the reconciliation of earnings to net operating cash flow format?

• A) Sale of cash equivalents at a gain
• B) Sale of cash equivalents at cost
• C) Dividends received on equity method investments
• D) Collection of an account receivable previously written off

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Definitions:

Allocated Fixed Costs

Costs that remain constant for a specific period regardless of the level of production or business activity, which are distributed across different departments or products.

Variable Departmental Costs

Costs that vary directly with the volume of output or level of activity within a specific department.

Direct Fixed Costs

Costs that are directly linked to a specific department or cost center and do not vary with the level of production or sales.

Discounted Cash Flow

A valuation method used to estimate the attractiveness of an investment opportunity by calculating the present value of expected future cash flows using a discount rate.