On a Statement of Cash Flows, Collections of Accounts Receivables

question 19

Multiple Choice

On a statement of cash flows, collections of accounts receivables are classified as:

• A) an operating activity.
• B) an investing activity.
• C) a financing activity.
• D) none of the above.

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Definitions:

Split-off Point

marks the stage in a production process where multiple products are generated from common inputs, necessitating allocation of costs among the products.

Avoidable Cost

A cost that can be eliminated (in whole or in part) by choosing one alternative over another in a decision. This term is synonymous with relevant cost and differential cost.

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent or salaries.

Contribution Margin

This is the amount remaining from sales revenue after all variable expenses have been deducted.