If the Indirect Method Is Used,which of the Following Would

question 73

Multiple Choice

If the indirect method is used,which of the following would be added to net income to arrive at net cash flows from operating activities?

• A)Increase in Inventory.
• B)Decrease in Prepaid Expenses.
• C)Decrease in Accounts Payable.
• D)Increase in Accounts Receivable.

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Definitions:

Conversion Costs

The combined cost of direct labor and manufacturing overhead, reflecting the expenses to convert raw materials into finished products.

Equivalent Units

A concept used in process costing that converts partially completed goods into a number of fully completed units for accounting purposes.

Direct Materials

Raw materials that can be directly traced to the production of goods and are a significant part of the finished product.

Conversion Costs

Expenses in manufacturing that include both labor costs and overhead costs associated with converting raw materials into finished goods.