Selected Data from the Financial Statements Are Provided in the Following

question 51

Multiple Choice

Selected data from the financial statements are provided in the following table:
$\begin{array}{lrrr}&\text { Year } 3&\text { Year } 2&\text { Year } 1\\\text { Cash } & \$ 44,000 & \$ 28,000 & \$ 14,000 \\\text { Accounts receivable } & 84,000 & 32,000 & 114,400 \\\text { Inventory } & 44,000 & 166,000 & 100,000 \\\text { Prepaid expenses } & 46,000 & 36,000 & 41,600\\\text { Total current assets }&\$218,000&\$262,000&\$270,000\\\\\text { Total current liabilities } & \$ 130,000 & \$ 144,000 \\\text { Net credit sales } & 442,000 & 652,000 \\\text { Cost of goods sold } & 336,000 & 598,000 \\\text { Net cash flows from operating activities } & 32,000 & 58,000\end{array}$
-Refer to the figure Rainsoft Company.What is the operating cash flow ratio for Year 3?

• A) 0.072
• B) 0.147
• C) 0.246
• D) 4.063

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Definitions:

Learning Curve

A concept indicating that the more often a task is performed, the lower the cost of doing it will become, due to increased efficiency and familiarity with the process.

Activity-Based Costing

A costing methodology that assigns costs to products and services based on the resources they consume, aiming for more accurate product costing and profitability analysis.

Nonvalue-Adding Activities

Tasks or processes that consume resources but do not add value or contribute to the customer's satisfaction or product's final worth.

Cost Driver Rate

A measure used in cost accounting to assign the costs of an activity to products or services, based on the extent of the activity they require.