Using the Indirect Method to Prepare the Statement of Cash

question 5

True/False

Using the indirect method to prepare the statement of cash flows,an increase in accounts receivable is subtracted from net income in calculating Net Cash Provided by Operating Activities.

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Definitions:

Cost Drivers

Factors that cause the cost of a product or service to change.

Single Plantwide Overhead Rate

A method in cost accounting where a single rate is used to allocate all of a plant's manufacturing overhead costs to its products.

Cost Driver

A factor that causes variations in the cost of an activity or process, influencing the financial performance of a company.

Joint Costs

Costs incurred in producing products up to a split-off point, where multiple products are generated from the same process and the costs cannot be separately identified for each product.