When an Entry Is Made to Adjust the Supplies Account

question 104

Multiple Choice

When an entry is made to adjust the supplies account and recognize supplies expense for the period, which section of the statement of cash flows is affected?

• A) Cash Flow from Operating Activities
• B) Cash Flow from Investing Activities
• C) Cash Flow from Financing Activities
• D) There is no effect on the statement of cash flows.

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Definitions:

Average Total Cost Curve

A curve that shows the average cost per unit of output at different levels of production; it typically has a U-shape.

Marginal Cost

The climb in cost associated with generating another unit of a product or service.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the quantity of output produced.

Marginal Cost

The cost of producing one additional unit of a product or service, which can change as the level of production varies.