When Using the Direct Method to Determine the Net Cash

question 123

Multiple Choice

When using the direct method to determine the net cash flows from operating activities,major categories would not include:

• A)Cash received from customers.
• B)Cash paid for salaries.
• C)Cash paid for dividends.
• D)Cash paid for inventory.

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Definitions:

Variable Costs

Costs that vary directly with the level of output or production, such as materials and labor costs.

Industry Short-run

A period in which at least one of a firm's inputs is fixed, limiting the firm's ability to adjust fully to market changes.

Marginal Cost

The financial addition incurred by manufacturing one more unit of a product or service.

Fixed Cost

represents expenses that do not change in total regardless of the level of output or activity, such as rent or salaries.