Explain Cost Flows for Activity-Based Costing

question 12

Essay

Explain cost flows for activity-based costing.

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Definitions:

Comparative Balance Sheet

A financial statement that presents the financial position of a company at two or more different points in time, side-by-side, to facilitate comparison.

Direct Method

An accounting approach where costs are directly traced to objects, such as products or services, without using cost drivers or allocation bases.

Cost of Goods Sold

The direct expenses tied to the production of goods sold by a company, including the cost of the materials and labor directly used to create the good.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations is used, instead of being derived from the income statement.