Under the Indirect Method of Preparing the Statement of Cash

question 79

Multiple Choice

Under the indirect method of preparing the statement of cash flows,the starting point to determine Net cash provided by operating activities is:

• A)the beginning cash balance.
• B)the ending cash balance.
• C)net income.
• D)sales.

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Definitions:

Accounts Receivable

Accounts receivable represents money owed to a company by its customers for goods or services delivered but not yet paid for, classified as a current asset on the balance sheet.

Transfer Prices

Prices used for transactions between divisions of the same company, often used for budgeting and taxation purposes.

Actual Costs

The real costs incurred by a business, including all expenses related to production, operation, and maintenance.

Standard Costs

Predetermined costs for materials, labor, and overhead used in budgeting and assessing performance by comparing them to actual costs.