What Are the Five Steps to Create a Level 2

question 46

Essay

What are the five steps to create a level 2 or higher data flow diagram?

Distinguish between selling and administrative expenses and manufacturing costs.

Identify direct costs and indirect costs with respect to a specific cost object.

Define and differentiate between prime costs and conversion costs.

Understand the financial implications of depreciation on financial statements for both office and factory equipment.

---

Definitions:

Accounts Payable

Liabilities or amounts owed by a company to suppliers for goods and services received but not yet paid for.

Inventory

The total amount of goods and materials held by a company, intended for sale or production.

Investing Transactions

Activities related to the acquisition or disposal of long-term assets and investments not included in cash equivalents within a company.

Cash Flow Statement

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.