Which of the Following Is True Concerning the Direct Method

question 66

Multiple Choice

Which of the following is true concerning the direct method of calculating operating cash flows?

• A) does not tie the net income reported on a company's income statement to the net cash provided from operating activities
• B) does not show how the changes in the elements of a company's operating cycle affected its operating cash flows
• C) reports a company's operating cash inflows separately from its operating cash outflows
• D) All of these choices

---

Definitions:

Job-Order Costing System

An accounting system that assigns costs to specific jobs or batches of goods, typically used in customized or non-uniform manufacturing processes.

Overapplied

A situation where the allocated overhead cost in a costing system exceeds the actual overhead costs incurred.

Underapplied

A situation where the applied cost in accounting is less than the actual cost incurred.

Cost of Goods Sold

The expenses directly related to the manufacturing of products sold by a business, encompassing both the cost of materials and labor specifically utilized in the production of those goods.