Under the Direct Method of Reporting Cash Flows from Operations

question 12

True/False

Under the direct method of reporting cash flows from operations, the primary source of cash is cash received from customers.

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Definitions:

Activity-Based Costing

An accounting method that assigns costs to products and services based on the resources they consume. This approach seeks to provide more accurate cost information by attributing overhead costs to specific activities.

Overhead Assigned

The allocation of indirect costs to specific products, services, or activities within a business.

Traditional Costing

A costing methodology that allocates manufacturing overhead based on volume-related measures such as labor hours or machine hours.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, indicative of the labor input required to complete production tasks.